Oh The Hypocricy!

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Bush Won't Be Forced Into `Bad Decisions' on Economy (Update1)
By Roger Runningen

March 15 (Bloomberg) -- President George W. Bush, under fire from Democrats who say he's doing too little to help homeowners facing foreclosure, said he won't be stampeded into ``bad policy decisions'' that might harm the economy.

``The market now is in the process of correcting itself, and delaying that correction would only prolong the problem,'' he said today in his weekly radio address. ``I believe the government can take sensible, focused action to help responsible homeowners weather this rough patch.''

Bush's remarks echoed a speech yesterday, when he said the economy is going through a ``tough time'' and that the Federal Reserve and the Treasury Department will take ``appropriate steps'' to stabilize the financial system after a bailout of Bear Stearns Cos., the fifth-largest U.S. securities firm.

Bush is scheduled to meet March 17 with his Working Group on Financial Markets, the nation's top financial regulators that include Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson and the heads of the Securities and Exchange Commission and Commodity Futures Trading Commission.

Bush said today he opposes a congressional plan that would give bankruptcy judges powers to reduce mortgage debts by decree, because banks would charge higher interest rates to cover the risk. Another proposal would have the government buy homes and take them off the market, leading to artificially higher prices than justified by the market, he said.

``If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help,'' Bush said.

Democrats' Plans

Some congressional Democrats said yesterday that the administration must do more to bolster the housing market, including backing a plan to let the Federal Housing Administration insure refinanced mortgages after lenders reduce principal to help struggling borrowers.

``The president seems to be on a different economic planet than most Americans,'' Senator Charles Schumer, a New York Democrat, said yesterday after Bush's speech to the Economic Club of New York.

Even U.S. Federal Deposit Insurance Corp. Chairman Sheila Bair, a Bush appointee, said yesterday that policy makers need to pursue ``more aggressive intervention'' in curbing the surge in foreclosures arising from the subprime-mortgage crisis.

Bernanke yesterday called for ``strong oversight'' of mortgage lenders, saying that ``far too much of the lending in recent years was neither responsible nor prudent.''

Foreclosures Rise

The collapse in housing has rippled into credit markets as foreclosures boost inventories of unsold homes, depressing prices and limiting refinancing opportunities for troubled borrowers. U.S. home foreclosure filings jumped 60 percent in February over the previous year, according to RealtyTrac Inc. of Irvine, California.

In his radio address today, Bush said the administration is pushing industry-led programs where lenders and service providers work with qualified borrowers to refinance home loans when they can't make their monthly mortgage payments. Government regulators also have stepped in to ensure that mortgage contracts are more transparent and fair, he said.

The president said Congress must take other steps to ease the home-lending crisis, including revamping operations of Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance providers.

Lawmakers also must streamline the Federal Housing Administration to become more competitive in the mortgage market and permit state housing agencies to issue tax-free bonds to help homeowners refinance their mortgages, Bush said.

Stimulus Package

A $168 billion stimulus package of rebates to 130 million households beginning in May, and tax breaks for business available now, will help boost the economy, Bush and his economic advisers say.

``By taking these steps and avoiding bad policy decisions, we will see our economy strengthen as the year progresses,'' Bush said in his radio address.

To contact the reporter on this story: Roger Runningen in Washington at rrunningen@bloomberg.net