Foreclosure Aid Sought By Thousands
With foreclosures reaching dizzy heights the administration from the feds to the state authorities are in a tizzy thinking out escape routes. The mortgage industry is itself in a plight having become the focus of criticism that has added to its own financial woes. Treasury Secretary Henry Paulson said that there are plans afoot by the industry to stem the foreclosure tide.
The government is now backed by nearly all those firms representing the sub-prime market to resolve the matter. Soon a fast-track plan will be announced that will allow a generous chunk of borrowers to avail of affordable loans. Paulson added that the move should be directed to other types of loan as well and not just sub-prime. The whole edifice needs a shake up. Only this will allow for healthy growth. The economy can stand the pruning and digging for a better tomorrow.
Paulson reiterated his appeal to the Congress to pass the legislation to permit Federal Housing Administration and Fannie Mae to handle more loans. The answer is for banks and financial bodies to raise more capital. This is ‘market discipline in action and should enhance market confidence over time’. It will be a positive step towards revitalizing the economy.
There have been many critics who say that American financial firms are being bought over by foreigners. But that point does not rattle Paulson who argues that when outsiders invest in USA it shows how much confidence the world has in America.
Paulson pointed to the improvement in short-term credit markets during the last few weeks. Central banks efforts to flood the market with short-term loans are having the desired effect. Progress has been made in the asset-backed commercial paper market and the gap between Libor and fed funds have shrunk remarkably. However Paulson cautioned that the White House would not rush in to the financial markets and interfere in matters in an effort to pep up the economy. The important point is to swim through the current waves and get the policy strokes correct rather than making glib announcements. Paulson concluded by saying that no singe step will be able to undo the mess that has built up over the years.
President Bush had hinted last week that his government was thinking of giving a push and stimulating the market. The formal announcement would be made in a speech towards the end of January. Fiscal moves in general refer to federal taxes and expenditure
