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President Bush issued his first response to the national mortgage meltdown this morning. You can read his full remarks here.
Among other things, Bush urged:
- No bail-out for speculators — of the homeowner variety or of lenders who risked too much and crashed and burned.
“A federal bailout of lenders would only encourage a recurrence of the problem,” Bush said. “It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”
- Lenders to work with distressed homeowners to adjust loan terms or arrange short sales, among other work-out options.
- Congress to modernize the Federal Housing Administration — the government arm that guarantees and securitizes mortgages.
- Congress to reform the tax code that levies significant taxes when homeowners refinance or adjust their loan amount for less than they originally borrowed.
- Steps to make the mortgage industry more transparent.
Here’s more from the White House on Bush’s foreclosure-avoidance plan.
And Federal Reserve Chairman Ben Bernanke said elsewhere this morning the Fed is poised to act to prevent mortgage-market chaos from derailing the entire economy.
From The New York Times’ sum-up of his remarks:
Mr. Bernanke walked a very tight line between trying to reassure financial markets and locking the Federal Reserve into a rescue effort that could prove either unwarranted or unwise over the longer term.
“It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions,” he said. “But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.”
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