Posted on 08/30/2007 10:52:31 PM PDT by TigerLikesRooster
Bush to outline subprime mortgage initiative
Fri Aug 31, 2007 12:00AM EDT
By Tabassum Zakaria and Glenn Somerville
WASHINGTON (Reuters) - U.S. President George W. Bush will propose reforms on Friday intended to help homeowners with subprime mortgages avoid default, his first public step to address a crisis that has created turmoil in financial markets around the world.
"He will also discuss reform efforts to prevent these kinds of problems from arising in the future," a senior administration official told Reuters on condition of anonymity.
Many analysts warn that a spreading credit crisis could drag the U.S. economy into recession but the Bush administration has repeatedly said that U.S. economic fundamentals are healthy and that global growth is robust.
Financial markets in the United States and abroad have been volatile in recent weeks as U.S. defaults have risen on so-called subprime mortgages to less credit-worthy borrowers, and questions have arisen about whether loans that have been bundled into securities sold overseas may also fail.
The Federal Reserve has taken steps to increase liquidity in markets and faces calls for interest-rate cuts to head off a broader credit squeeze that could drag economic growth down.
Bush, in a statement scheduled for 11:10 a.m.EDT in the White House Rose Garden, will discuss the need for Congress to pass Federal Housing Administration reform legislation aimed at giving the agency the flexibility to help subprime mortgage borrowers, two administration officials told Reuters.
One move will be an administrative change to allow the Federal Housing Administration to guarantee loans for borrowers at least 90 days behind in mortgage payments to help them avoid foreclosure, the Wall Street Journal reported from a briefing given to a few newspapers.
The Federal Housing Administration was founded in the 1930s Depression years after the U.S. banking system failed and millions of Americans were made homeless. Now its mission is to foster home ownership by insuring mortgage loans, especially for poorer Americans who face difficulty meeting terms for conventional loans.
The risk of a credit squeeze stemming from rising defaults on subprime mortgages has fueled worry that consumers will trim spending at a rate that could tip the economy into recession.
Bush will urge the Democratic-led Congress to work with him in a bipartisan way to reform the tax code to help troubled borrowers revise their loans, administration officials said.
Bush will ask Congress to temporarily suspend a tax provision that has left some troubled homeowners with large tax bills, the Wall Street Journal reported.
Bush is also expected to direct Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to work on an initiative to help troubled mortgage holders obtain services and products needed to prevent default, officials said.
He will discuss the need for rigorous enforcement of predatory lending laws and strengthening lending practices, they said.
Stock prices fell on Thursday on concern that credit market upheaval was spreading, with the Dow Jones industrial average () down 50.56 points to close at 13,238.73.
The rising home-mortgage default rate has been seized upon by Democrats who say the Bush administration failed to make sure that regulators enforced rules that oblige lenders to make sure that borrowers could repay their loans.
Hundreds of billions of dollars worth of the riskiest subprime loans carry low initial rates that will adjust, or "reset" at higher rates, between now and the end of 2008.
That is expected to push the default rate up and could create a potentially devastating political issue for Republicans gearing up for the 2008 elections.
Federal Reserve Chairman Ben Bernanke, who has been criticized for being too slow to take sterner measures to stamp out the smoldering credit crisis, is scheduled to speak on Friday morning about housing and monetary policy shortly before Bush's statement.
I wonder.
Big Government George strikes again.
Totally disgusting. I pay a higher mortgage rate because I wisely opted for a 30-year fixed when the rate was in the 5s yet as low as 4 for the subprime ARM, and now Bush is going to help out these people who are about to default because they were gambling on the rates. I've lost money in the stock market. Can someone recover that money for me?
This is outrageous.
Bush is a wrong on this IMO.
The solution can begin and end with telling these folks to sell their jet skis, Escalades, motorhomes, and vacation homes, cook their own meals at home, and don’t be so stupid to think they can buy homes with a payment that is 50% of their gross income...and pay less than the interest that is due every month. There’s no need for George Bush to be sticking his fingers in my wallet to bail out someone with no financial sense.
So if at the end of the day, there is a Federal taxpayer bailout all for the sake of "compassionate conserrrrrrrrrvatism" one can see the connection of these two issues, when it comes to Bush.
If true, do I ever countdown the days with even greater interest.
The theme of Bush’s speech will be “Prudence is for suckers. Smart guys borrowed more than they could possibly handle- and you lucky tax payers are going to reward this behavior.”
President Bush’s approval rating stands at about 29%, Congress is about half that.
Obviously the Rats would love to hand out lots of our hard-earned money to the oh-pressed minorities, but maybe they will refuse to go along with this plan out of spite.
Best thing we could hope for is another 1.5 years of gridlock until FDT moves in.
Bush reverted back to what he was during Texas Governor days.
If so, man! have we ever had a fox in the henhouse for the last 6 long years.
Why? They have you to bail them out, thanks be to George.
“family values doesn’t stop at the loan office”
Forget taxes, the impact on the dollar should be a show all by itself.
He may be doing this in lieu of the Fed lowering interest rates. If the Fed lowers interest rates it will cause a severe weakening of the US dollar and probably stagflation (No growth with inflation). Then we all pay for it with higher prices. That will happen no matter what he or the Fed does, it’s just the degree to which it happens.
“Loans Americans just won’t pay anymore.”
Do bears crap in the woods?
I have news for you, this bailout will also be inflationary.
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