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Bush is urged to appoint 'mortgage czar'
usatoday.com
By Alister Bull and Mike Peacock, Reuters
U.S. lawmakers called for creation of a "mortgage czar" Wednesday to help cope with an expected wave of foreclosures from the housing slump, but Alan Greenspan said the credit crunch was past the worst.
"We are beginning to see the frenzy calm down," the former chairman of the Federal Reserve told a conference in Lisbon, Portugal. "Unless we get secondary effects, the worst is over."
Still, U.S. mortgage delinquencies have soared in recent months, and about 1.7 million home loans will go into foreclosure this year and next, according to Moody's Economy.com.
Democrats, who control Congress, called on President Bush to name a "mortgage czar" to coordinate the federal response to the expected wave of foreclosures.
"We're standing here today saying, 'Mr. President, February is hundreds of thousands of foreclosures away,' " said Sen. Charles Schumer, D-N.Y. "The time to act with sensible policies is today."
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The White House said that there was no point in adding an extra layer of bureaucracy.
"We have a housing czar. His name is Alphonso Jackson. He's the secretary of Housing and Urban Development," White House spokesman Tony Fratto said.
The lawmakers also proposed relaxing the rules on investments by government-sponsored enterprises Fannie Mae and Freddie Mac so they can buy more risky home loans.
Separately, the White House said laws under discussion to provide tax relief for people facing foreclosure should only be temporary. The legislation would no longer classify debt forgiven in a foreclosure as income.
Fallout from a global credit squeeze, sparked by problems in the U.S. subprime mortgage market, have rattled markets in recent weeks, threatening economic growth and bank earnings.
Subprime mortgages are higher-cost loans to borrowers with poor credit.
Germany's largest bank, Deutsche, wrote down more than $3 billion after the liquidity crunch but said on Wednesday that it still expected net profit to rise to more than $2 billion in the third quarter. |
