It’s been a busy news day already as President Bush outlined his initial plans to for the government to aid in softening the mortgage and housing disaster. You can read more about it here, here, and here.
From Bush’s speech this morning:
On Friday, Bush said he planned to:
- Urge Congress to pass legislation that would give the Federal Housing Administration more flexibility in assisting mortgage holders with subprime mortgages.
- Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.
- Call for rigorously enforcing predatory lending laws and strengthening lending practices.
And Bernanke said that the Fed is ready to “act as needed” as needed to ensure the credit meltdown doesn’t derail the greater economy:
The Fed “continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets,” he said at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. “Further tightening of credit conditions, if sustained, would increase the risk that the current weakness in housing could be deeper or more prolonged than previously expected.”
…
“The Federal Reserve stands ready to take additional actions as needed to provide liquidity and promote the orderly functioning of markets,” Bernanke said.
Several other bloggers are all over this as well: HP & CR.
We’ve been talking about this in another thread. While the argument of moral hazard is clearly correct, the question remains that if the government is willing to bail out farmers, airlines, S & Ls, automotive firms, and corrupt dictatorships (in the past & surely the future) how do the American people get left off of that list?
The changes above are band aids, but it will remain to be seen what permutations the Congress puts on the bills before they hit the street.
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[Source: Blown Mortgage]
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