Greenspan To Solve Housing

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Submitted by Deal Hunter on March 25, 2008 - 6:57pm

WHITE PLAINS, New York (Reuters) - Former Federal Reserve Chairman Alan Greenspan and other economic experts should determine whether the U.S. government needs to buy up homes to stem the country's housing crisis, Democratic presidential candidate Hillary Clinton will propose on Monday.

Clinton, a presidential candidate and senator from New York, said the Federal Housing Administration should "stand ready" to buy, restructure and resell failed mortgages to strengthen the ailing U.S. economy.

"Just as it has in the past, this kind of temporary measure by the government could give our economy the boost it needs and families the help they need," Clinton will say, according to excerpts of remarks prepared for a speech in Philadelphia.

"It would not require a single new government bureaucracy, and would be designed to be self-financing over time -- so it would cost taxpayers nothing in the long run."

Clinton threw her weight behind legislation proposed by Democrats Rep. Barney Frank of Massachusetts and Senator Chris Dodd of Connecticut that would "expand the government's capacity to stand behind mortgages that are reworked on affordable terms."

But she said a bipartisan group should determine whether that approach was sufficient or whether the U.S. government should step in as a temporary purchaser.

The working group could be led by bipartisan economic heavyweights such as Republican Greenspan, Democratic former Fed Chairman Paul Volcker and Robert Rubin, the treasury secretary under President Bill Clinton.

Under the Frank plan, the government would take failing mortgages off the hands of investors and write new terms that would prevent foreclosure. It would see lenders write down the mortgage amount in exchange for a government guarantee.

The former first lady has argued her experience makes her a stronger candidate than rival Barack Obama, a senator from Illinois, to steer the economy.
A focus on the housing crisis also appeals to the working class constituency that has been a big part of her support base. Clinton proposed last week that a new economic stimulus package be created to focus on the housing slump.

The proposal included a $30 billion emergency housing fund to put cash in the hands of local governments and nonprofit organizations to buy and resell properties to low-income people or turn them into affordable rental housing units.

‹ Seen on money.cnn.com: BREAKING NEWS - Stocks tumbled, Dow shedding over 100 points Merril Lynch report on Commercial RE ›
Bad Idea...IMO! However,
Submitted by Deal Hunter on March 25, 2008 - 6:58pm.

Bad Idea...IMO! However, this just could get her elected.

This is a pipe dream. To get
Submitted by cr on March 26, 2008 - 10:19am.

This is a pipe dream.

To get money to buy all these "failed mortgages" (a terrible idea in and of itself) Hillary will of course raise taxes. Pinning the consequences of a financially imprudent group of people, who shouldn't "own" homes anyway, on the savers and renters.

But let's just say Hillary wins the lottery and has enough private money to personally buy every single teetering mortgage in America.

Who is going to buy them from her?

WORST IDEA EVER. I'm back
Submitted by PadreBrian on March 26, 2008 - 12:03pm.

WORST IDEA EVER. I'm back in the USSR.
You don't know how lucky you are, boy.

She is such an idiot.
Submitted by jficquette on March 26, 2008 - 4:13pm.

She is such an idiot. Greenspan was the fool who created this mess.

John

"It would not require a
Submitted by DoJC on March 26, 2008 - 6:04pm.

"It would not require a single new government bureaucracy, and would be designed to be self-financing over time -- so it would cost taxpayers nothing in the long run."

I guess I'm too stupid to understand how this will happen without costing taxpayers anything in the long or short run? How is the gov't going to step in and buy hundred of billions of dollars worth of homes, refinance them, and then resell them to someone else? Where does all this magic money come from? Who's going to buy them? Who will absorb the losses when they drop in value from the time the gov't buys until they sell? Who determines whether or not the person is even capable of repaying the loan they never should have gotten in the first place?

Man, too many unanswered questions that only a politician could prpose and think we'd swallow completely and think it was a good idea. Sheesh, how do ANY of these clowns get nominated much less elected!

- Doug

We are in the minority here.
Submitted by Deal Hunter on March 26, 2008 - 6:35pm.

We are in the minority here. Even though we see the many pitfalls of such a suggestion, it is something Hilary can pull off with Greenspan to garner the vote of SO MANY people facing homelessness due to the housing crisis.

It would be a living nightmare, but don't be surprised if Greenspan/Clinton bubble machine returns, this time with massive popular appeal.

Doug my read is something
Submitted by SD Realtor on March 26, 2008 - 11:07pm.

Doug my read is something like what is currently being proposed today only on a larger scale...

That is the FHA will bail out distressed homeowners by purchasing the existing mortgage from a lender. The purchase will be made (HOPEFULLY) at a presently appraised value. The lender writes down the difference. The homeowner gets a new loan at a low rate pretty much directly from the FHA.

So no there is no new beauracracy, just the existing one that becomes responsible for oh... maybe 1-2 trillion worth of mortgages. So basically that is the plan. In short it is a very close step to nationalizing housing.

Who determines if the person is capable of repaying the loan? Why the FHA? Who backs the FHA

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