WASHINGTON — On the heels of the White House-blessed and Treasury-approved bailout of Bear Stearns, Representative Barney Frank (D-Mass.) offered his mortgage rescue legislation to Congress.
His plan calls for a federal program to provide insurance for up to $300 billion in refinanced mortgages. Republicans have waved flags about making credit too tight in an already tightening market by over regulating lenders (a corollary to helping both bankers and borrowers is increased oversight), but as foreclosures deepen the plan may pick up speed. Frank signaled that Treasury officials had responded positively, seeking talks with the House Financial Services Committee chairman.
Little resulted from Federal Reserve Chairman Ben Bernanke's recent appeal to community bankers suggesting they write down a portion of the principal owed on delinquent loans to stem rising foreclosures because lenders are reluctant to do so. But Frank's legislation may offer the guarantee they need. He says it will help stabilize the housing market. Until the Bear Sterns bailout both the Treasury and the White House were on record opposed to any direct governmental assistance to homeowners, preferring lenders to do workouts.
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