Wall Street Journal (03/24/08) P. A11
The federal government is considering several proposals to prevent additional weakness in the housing and mortgage markets and to change how financial institutions are regulated. With regard to housing, proposals in both the House and the Senate would allow the FHA to refinance problem loans after lenders or investors agree to forgive a portion of the principal; $300 billion in refinances would occur under the plan promoted by House Financial Services Committee Chairman Barney Frank, D-Mass., while $400 billion in government insurance would be provided for refinancings under a proposal from Senate Banking Committee Chairman Christopher Dodd, D-Conn. However, the Bush administration continues to push for borrowers and lenders to work problems out amongst themselves, with Congress taking steps to pass FHA modernization legislation and beefing up regulation of Fannie Mae and Freddie Mac. Other proposals would bolster mortgage counseling funds, offer tax relief to home builders and allow the Federal Home Loan Banks to buy $160 billion in mortgage-backed securities. Meanwhile, the Treasury is considering a move that would put the Federal Reserve in charge of overseeing the stability of the financial markets, instead of supervising state-chartered banks.
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