FDIC chief Sheila Bair sees housing pain into 2010

Financial Crisis Posted on

The housing crisis will drag on at least until 2010, time needed for credit markets to revive and government rescue programs to make an impact, the head of the Federal Deposit Insurance Corp. said Thursday.

FDIC Chairman Sheila Bair said regulators were bracing for a difficult year ahead as the economy staggers under the worst crisis since the 1930s and mounting job losses push new multitudes of struggling home borrowers into default.

"We think we're going to have a tough year next year, and we're preparing for that," Bair said in an interview with The Associated Press. "But we'll work through it."

"By 2010 we'll be seeing the light at the end of the tunnel," Bair said.

She spoke as industry reports showed the number of U.S. homeowners dragged into the housing crisis fell in November to the lowest level since June as new state laws lengthened the foreclosure process.

More than 259,000 homes nationwide received at least one foreclosure-related notice last month, down 7 percent from October, but 28 percent higher than a year ago, according to RealtyTrac.

Bair stressed that the preponderance of U.S. banks and thrifts — some 90 percent — continue to be in strong financial condition. Twenty-three banks have failed so far this year amid the economic tumult, including Seattle-based thrift Washington Mutual Inc. in September, the biggest bank collapse in U.S. history. That compares with three failures for all of 2007 and is far more than in the previous five years combined.

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