Market can heal U.S. subprime crisis: U.S.'s Lazear

LONDON (Reuters) - Markets will find a way to solve the subprime debt crisis, allowing most homeowners affected to stay in their homes, White House economic advisor Ed Lazear said in an interview with the Financial Times newspaper on Monday.

"I believe, and the I think the president believes, that markets are very good at finding their ways to solve problems," said Lazear, the chairman of the White House council of economic advisors.

U.S. President George Bush proposed measures on Friday to prevent homeowners from defaulting on mortgages. Growing bad debt in subprime mortgages has triggered turmoil on markets as lenders lose confidence in each other and liquidity dries up.

There have even been fears the U.S. economy could slip into recession, but Bush said he was not about to bail out lenders.

Lazear told the FT three-quarters of the estimated 2.5 million homeowners affected would remain in their homes either by keeping up payments, refinancing their mortgages or agreeing new terms.

The remaining 20 to 25 percent faced a real threat of losing their homes, he said, but noted government could help many of them.