Treasury Secretary Criticizes Housing Proposals

[Mar 10, 2008.]

 

Treasury Secretary Henry Paulson indicates that a number of the plans being pushed in response to the nation's housing crisis could be harmful.

Paulson concedes that the housing slump poses the greatest risk to the economy. But he adds that it's important to keep the issue in focus. For instance, the Treasury Secretary notes that 93% of all mortgages are being paid on time and less than 2% are actually in foreclosure.

"So while some in Washington are proposing big interventions, most of the proposals I've seen would do more harm than good," Paulson said. "I'm not interested in bailing out investors, lenders, and speculators. I'm focused on solutions targeted at struggling homeowners who want to keep their homes."

Congressional Democrats have put forward proposals to step up assistance to the ailing housing market. However, Paulson is leery of the plans. "If borrowers aren't willing to ask for help or respond to efforts to reach them, there is only so much that others can or should do on their behalf," Paulson said.

It's estimated that the current housing crisis could result in as many as 2 million foreclosures in 2008. In response, Senate Banking Committee Chairman Christopher Dodd (D-Conn) and House Financial Services Committee Chairman Barney Frank (D-Mass) are leading the charge to increase government aid to financially ailing homeowners.

In response, President George W. Bush has stated that he's concerned that some of the plans would increase the cost of mortgages and would penalize would-be home buyers. He added the proposals would do more to "bail out lenders and speculators than to help American families keep their homes."
The nation's housing situation is the worst it's been in some 16 years.

Financial experts do not expect the situation to turn around until at least the middle of 2008. Meanwhile, some forecasters predict the slump will continue until the year 2010.

Julie Ann Amos
March 10th 2008

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