By: David Dayen

The Administration’s FY 2013 budget predicts a large shortfall for the Federal Housing Administration, which has predictably suffered during the housing crisis. But the FHA’s Acting Director (what a surprise, an acting director at a key regulatory agency) says that shortfall has been
wiped away by the foreclosure fraud settlement deus ex machina:

“A budget plan sent to Congress today projected that the FHA would require as much as $688 million from the U.S. Treasury Department. It would be the first cash draw in the agency’s history.
That estimate is “obsolete,” (Carol) Galante said in an interview, because five of the nation’s largest banks last week agreed to inject about $1 billion into the agency’s capital reserve fund to settle fraud and foreclosure claims. “

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