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News Now

Washington
CUNA on subprime woes Washingtons three views
WASHINGTON (12/5/07)—Credit Union National Association (CUNA) President/CEO Dan Mica told a national television audience Tuesday that a Treasury plan to provide foreclosure relief to some subprime mortgage borrowers has promise, but warned that no action can be a “silver bullet.”
Click to view larger image CUNA President/CEO Dan Mica appears during a live Bloomberg broadcast shown on the Verizon Center's Jumbotron in downtown Washington, D.C. (Photo provided by CUNA)
During a live interview on Bloomberg TV, Mica advised that Congress needs to act carefully when considering actions to ease the country’s subprime mortgage woes. But, he added, action is necessary because no one would benefit from mass foreclosures—neither homeowners nor investors nor the economy in general. Mica also noted that the recent willingness of federal policymakers to publicly consider action to mitigate foreclosures when they were reticent just a few months ago to do so is an indication of the severity” of the problems in the subprime mortgage market. In fact, amid a tumult of disturbing subprime mortgage headlines, Washington appears to be investigating three types of approaches to the challenges threatened by looming foreclosures. Ryan Donovan, the CUNA vice president of legislative affairs, advises that most of what is being discussed can be broken into three categories: retrospective—looking back at all that has occurred and what can be done to keep people in their homes; prospective—looking into the future and how to prevent anything similar occurrences in the future; or they are seeking ways to restore sources of consumer credit. Falling into that final category is one of the most recent pronouncements relating to mortgage relief. On Monday, Reuters reported that Treasury Secretary Henry Paulson said he hoped to have such a plan ready by the end of the week. Paulson said federal lawmakers should give local governments more borrowing power to stave off the flood of impending foreclosures. Reuters also noted that the Bush administration is pushing for an agreement with the mortgage industry to freeze resets of interest rates on subprime loans whose rates are headed for a sharp jump up. The administration is also encouraging Congress to consider other measures to ease the strains in the housing market. The retrospective approach to the subprime problem can be represented by efforts in the House and Senate to investigate whether changes to the U.S. Bankruptcy Code might be an effective way to keep more people in their homes purchased through subprime hybrid ARM loans. While the House Financial Services Committee and the Senate Banking Committee are involved in examining “retrospective” proposals, the chairmen of those panels have also expressed keen interest in avoiding any similar problems in the future with “prospective” actions.


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