Henry Paulson's Answer to Subprime Crisis is Best Solution, Heritage Says
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The Heritage Foundation, a conservative think tank based in Washington, D.C., has published a new web memo analyzing Treasury Secretary Henry Paulson's solution to the ongoing subprime mortgage crisis. The memo, authored by David C 
. John and Alison Acosta Fraser and available on The Heritage Foundation's web site, is titled "Hope Now: One Step to Resolve the Subprime Mortgage Crisis."
Hope Now, which is a voluntary agreement involving mortgage lenders, investors, and other interested parties, offers a much more reasonable approach for dealing with the subprime mortgage crisis than strict congressional action, the memo says. Ultimately, the memo argues, whatever approach the federal government takes should be temporary and limited in nature so that long-term harm is not done to the U.S. housing market.
Summarizing Secretary Paulson's Hope Now approach, the memo says the Treasury Secretary worked alongside key stakeholders to produce an agreement that would suspend increases in mortgage interest rates for a specified time period. The move prevents mortgage rates that were initially low from skyrocketing and would allow mortgage holders to continue to make their required payments.
The Hope Now strategy, the memo says, can bring a level of stability to U.S. financial markets without seriously risking damage to the American economy. Unless steps are taken, the authors argue, there is the likelihood that the number of foreclosures will increase. Paulson's approach, says Heritage, is not a "bailout," but a "time out."
In conjunction with Secretary Paulson's Hope Now approach, the memo says, President Bush is asking the Congress to work on multiple pieces of legislation, including his FHA modernization plan, an exemption for mortgage forgiveness from taxable income, permitting states to refinance mortgages through the use of tax-exempt bonds, expanding loan counseling services, and revisions to federal regulation of the Freddie Mac and Fannie Mae programs.
Henry Paulson's Answer to Subprime Crisis is Best Solution, Heritage Says
Hope Now, which is a voluntary agreement involving mortgage lenders, investors, and other interested parties, offers a much more reasonable approach for dealing with the subprime mortgage crisis than strict congressional action, the memo says. Ultimately, the memo argues, whatever approach the federal government takes should be temporary and limited in nature so that long-term harm is not done to the U.S. housing market.
Summarizing Secretary Paulson's Hope Now approach, the memo says the Treasury Secretary worked alongside key stakeholders to produce an agreement that would suspend increases in mortgage interest rates for a specified time period. The move prevents mortgage rates that were initially low from skyrocketing and would allow mortgage holders to continue to make their required payments.
The Hope Now strategy, the memo says, can bring a level of stability to U.S. financial markets without seriously risking damage to the American economy. Unless steps are taken, the authors argue, there is the likelihood that the number of foreclosures will increase. Paulson's approach, says Heritage, is not a "bailout," but a "time out."
In conjunction with Secretary Paulson's Hope Now approach, the memo says, President Bush is asking the Congress to work on multiple pieces of legislation, including his FHA modernization plan, an exemption for mortgage forgiveness from taxable income, permitting states to refinance mortgages through the use of tax-exempt bonds, expanding loan counseling services, and revisions to federal regulation of the Freddie Mac and Fannie Mae programs.