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03-14-2008, 08:49 AM #1
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Rep. Frank Floats $300 Billion Bailout for Borrowers
Rep. Frank Floats $300 Billion Bailout for Borrowers
MoneyNews
Thursday, March 13, 2008
WASHINGTON -- The Treasury Department will review a proposal from a top Congressman who wants a federal agency to buy distressed mortgages, but the department only wants help for homeowners, not investors, a top official said.
"Chairman (Barney) Frank is a very wise man and we'll be looking forward to studying his particular proposal in great detail," Treasury Undersecretary for Domestic Finance Robert Steel said in an interview on CNBC Television.
Steel cautioned, however, that the Treasury Department's focus was keeping troubled borrowers in their homes.
"What we're very cautious about are any programs that will serve as bailouts for Wall Street, for banks and for investors," he said. "We're really trying to focus on the homeowner and that's what we're about."
Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, said on Thursday his new bill would allow the Federal Housing Administration to "insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders."
The FHA would offer up to $300 billion in new loan guarantees to help the refinancing of 1 million to 2 million mortgages.
Steel acknowledged that the proposals announced by U.S. Treasury Secretary Henry Paulson on Thursday to improve practices and strengthen oversight of credit markets and mortgage originations were separate from Bush administration efforts to deal with the current housing crisis and credit crunch.
The Treasury has focused on a private sector initiative among mortgage lenders and servicers to keep people in their homes through voluntary renegotiations of mortgage terms.
Thursday's announcements constitute "looking down the road" beyond the current crisis to help prevent a repeat, Steel said.
"We're optimistic that the market will take some solace ... to know that we're thinking about things and have a plan and we're going to be vigilant to make sure that we're on the right track going forward so that we can learn from some of the mistakes of the past," he added.
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