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Investor Confidence Wanes Amid Housing Troubles

[Sep 27, 2007.]

 

The chairman of the House Financial Services Committee says investor confidence is slipping in the wake of what has been described as the worst housing crisis in 16 years.

"What we have is a severe lack of investor confidence," stated Rep. Barney Frank (D-MA). The Congressman is calling on Congress and the White House to join forces in an effort to revive the housing market.

Meanwhile, the Treasury undersecretary for domestic finance, Robert Steel, has said that the full extent of the unrest in financial markets "has yet to play out."

This week, stocks declined in the wake of a report depicting a significant decrease in pending home sales. Meanwhile, Steel told members of Congress, "This process is far from over…The ultimate impact of these events on the economy has yet to play out."

The House panel is investigating how consumers might be impacted by the turmoil in the financial and housing markets. Approximately 2 million adjustable rate mortgages are scheduled to re-adjust this year, forcing homeowners to pay higher interest rates. That could create a domino effect, leading to additional foreclosures.

The situation on the housing front has gotten so bad that it could emerge as a key issue in next year's Presidential contest. It could also become a hot topic of discussion in Congressional races.

Meanwhile, the White House is putting forth a plan that would make it easier for those with adjustable rate mortgages to refinance with the help of the Federal Housing Administration, an institution that was established during the Great Depression to promote home ownership, especially among low income Americans. Tens of thousands of Americans could potentially take part in the Bush Administration program. Rep. Carolyn Maloney (D-NY) has referred to the White House proposal as "an important first step," but has also dismissed it as being "not enough."

Julie Ann Amos
September 27th 2007

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