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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (151097)	9/26/2008 10:36:31 PM
From: Les H	Respond to of 306849

House Republicans Support a Plan That Would Insure Troubled Mortgages By EDMUND L. ANDREWS Published: September 26, 2008 WASHINGTON — After temporarily derailing the Bush administration’s $700 billion proposal to bail out the financial system on Thursday, House Republicans pared back their goals on Friday and demanded that the plan rely at least partly on an industry-financed insurance program for troubled mortgages. Issuing a vague declaration of “economic rescue principles” to limit the use of taxpayer money, the Republican lawmakers focused primarily on the insurance program. The proposal would have banks and investment firms that own mortgages and mortgage-backed securities pay premiums for insurance that would guarantee them against losses if the mortgages default. Supporters of the plan said it would restore confidence in mortgage-backed securities without putting taxpayer money at risk. “Instead of making the taxpayers pay, the securities holders would pay,” said Representative Paul Ryan, a Wisconsin Republican who helped create the plan. That would be sharply different from the plan developed by Treasury Secretary Henry M. Paulson Jr., which would have the government buy up to $700 billion worth of currently unsalable mortgage-backed securities. Treasury officials have argued that their plan would address the heart of the financial crisis, which is that banks and investment firms are holding vast quantities of securities that have little or no market value. By having the government buy up and hold those securities until the panic dies down, Mr. Paulson has been hoping to free the balance sheets of financial institutions, allow them to raise fresh capital from investors and start making loans again. But Republican lawmakers said on Friday that they were not trying to scrap Mr. Paulson’s plan entirely. Instead, they said, they would simply try to insert an insurance program into the overall package. nytimes.com