Pressure mounts for action on housing
WASHINGTON - Faced with rising economic anxiety and the high-profile rescue of a major investment bank, lawmakers are considering sweeping changes to financial regulation and a massive effort to buy troubled home loans.
While they debate, frustrations are building that Congress and the Bush administration aren't doing enough to combat the economic impact of falling home prices, banks' unwillingness to lend freely, and a seized-up market for mortgage-linked investments.
Industry groups are preparing to lobby for help when Congress returns from recess March 31. Builders want more - including a tax credit for people who buy homes.
US Representative Barney Frank, a Massachusetts Democrat who chairs the House Financial Services Committee, and Senator Christopher Dodd, a Connecticut Democrat who heads the Senate Banking Committee, are crafting a plan in which the Federal Housing Administration would guarantee up to $300 billion in refinanced mortgages if investors agreed to take a loss on them.
Regulators are taking urgent steps to shore up the market for mortgage investments. The Federal Reserve earlier this month allowed investment firms to borrow up to $200 billion in safe Treasury securities and put up mortgage-backed securities as collateral. Yesterday, regulators authorized the 12 regional banks in the Federal Home Loan Bank system to increase purchases of Fannie Mae and Freddie Mac mortgage securities by $100 billion.
