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February 18, 2009
Obama Calls For Responsibility In Housing Plan
By Mike MemoliCalling on lenders and homeowners alike to "step back and take responsibility," President Obama announced some specific steps to address the nation's foreclosure crisis, a $75 billion plan that he said is "a price well worth paying."
"All of us are paying a price for this home mortgage crisis, and all of us will pay an even steeper price if we allow this crisis to continue to deepen," he said at a Phoenix-area high school this morning. "If we act boldly and swiftly to arrest this downward spiral, every American will benefit."
A core part of the plan is rebuilding confidence in Freddie Mac and Fannie Mae. Obama said that, at a minimal cost to taxpayers, his plan would start by removing a restriction on the two giants to allow them to refinance mortgages they already own or guarantee.
Using money already approved through the TARP program, Obama also said the Treasury would infuse $200 billion in capital to allow Fannie and Freddie to "continue to stabilize markets and hold mortgage rates down." Other provisions would give bankruptcy judges more leeway to modify mortgages in court, as well as giving new incentives to lenders to modify the terms of sub-prime loans at risk of default.
The president, speaking in a city where housing prices have dropped 43 percent, said his plan would help up to nine million families avoid foreclosure. But he was sure to also explain its limits, saying he did not seek to rescue "unscrupulous or irresponsible" lenders, speculators "who took risky bets," or those who borrowed more than they could afford.
"Solving this crisis will require more than resources - it will require all of us to step back and take responsibility," he said. "Government must take responsibility for setting rules of the road that are fair and fairly enforced. Banks and lenders must be held accountable for ending the practices that got us into this crisis in the first place. And each of us as individuals must take responsibility for their own actions. That means all of us must learn to live within our means again."
Obama was under pressure to offer more details than were made public by his Treasury Secretary, Tim Geithner, last week. When Geithner's remarks were released, the stock market dropped several hundred points. Today, by contrast, the Dow Jones Industrial Average remained largely steady.
