Democrats to add subprime relief to treasury’s rescue proposal
US Treasury Secretary Henry Paulson is sending his plan to rescue the financial system to Congress as Democrats prepare to turn it into a vehicle to help people with high-cost mortgages stay in their homes.
By Bloomberg |
NEW YORK: US Treasury Secretary Henry Paulson is sending his plan to rescue the financial system to Congress as Democrats prepare to turn it into a vehicle to help people with high-cost mortgages stay in their homes.
The Treasury will run the programme to take on illiquid mortgage-related debt, with the Federal Reserve consulting on its design, officials said.
Treasury aides are spending the weekend with congressional staff to negotiate a compromise that the House and Senate can vote on next week.
Paulson, Fed Chairman Ben S Bernanke and other regulators are eager to stop a contagion of credit risk that has toppled three financial giants and forced one into a merger as capital flight began to squeeze Wall Street.
Democrats are indicating they want to target relief for households by restructuring loans of struggling borrowers.
���We���re going to be buying up a lot of mortgage paper,��� said House Financial Services Committee chairman Barney Frank.
���Between Fannie Mae and Freddie and the mortgage paper we���ll be acquiring here��� and the Federal Deposit Insurance Corp. running failed bank IndyMac Bancorp Inc., ���we should now be able substantially to reduce foreclosures,��� he said.
The Treasury will run the programme to take on illiquid mortgage-related debt, with the Federal Reserve consulting on its design, officials said.
Treasury aides are spending the weekend with congressional staff to negotiate a compromise that the House and Senate can vote on next week.
Paulson, Fed Chairman Ben S Bernanke and other regulators are eager to stop a contagion of credit risk that has toppled three financial giants and forced one into a merger as capital flight began to squeeze Wall Street.
Democrats are indicating they want to target relief for households by restructuring loans of struggling borrowers.
���We���re going to be buying up a lot of mortgage paper,��� said House Financial Services Committee chairman Barney Frank.
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���Between Fannie Mae and Freddie and the mortgage paper we���ll be acquiring here��� and the Federal Deposit Insurance Corp. running failed bank IndyMac Bancorp Inc., ���we should now be able substantially to reduce foreclosures,��� he said.
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