HURRY! We Have To Do Nothing

Mortgage mess has government scrambling, unless your hiding behind the Bush
Administration.




WASHINGTON (AP) -- After a slow and stumbling start, Washington is scrambling to prevent the unfolding mortgage crisis from pushing the country into recession during an election year. There is a strong feeling, though, that the government will need to do more to avert a financial disaster.

Former Treasury secretary Lawrence Summers advocates temporary tax cuts and emergency spending on the order of $50 billion to $75 billion. Such action could help the U.S. from slipping into what Summers, who served under President Clinton, fears could become the worst downturn since the steep 1981-82 recession.

Some Republicans are worried, too.

Both Martin Feldstein, who was President Reagan's top economic adviser, and former Federal Reserve Chairman Alan Greenspan have called for deeper government intervention.

So far, the Bush administration has opted for less dramatic measures. In fact, the administration came reluctantly to its biggest step taken - the "teaser freezer."

A deal with the mortgage industry will freeze the low introductory "teaser" rates for five years on some subprime mortgages - loans to people with spotty credit histories. Otherwise the rates will climb much higher, making the mortgages unaffordable for many.

A freeze could buy time for housing to rebound, making it easier for homeowners to refinance to affordable fixed-rate loans. But estimates are that only about 250,000 people will end up getting a freeze - a fraction of the 3.5 million home loans that could go into default over the next two-and-a-half years.

The administration also is working with Congress to increase the $417,000 cap on the size of loans that the big mortgage companies Fannie Mae and Freddie Mac can handle. This step could help in high-cost housing areas such as California.

So we still have a lot of talk. We can support our arguments with great physical
data which only a year ago we could speculating on. If it were me,
and I was President I would tell the people they dug there own graves, now go lye
in them!