Clinton proposes steps to ease US housing crisis

By Jeff Mason

PHILADELPHIA (Reuters) - Democrat Hillary Clinton proposed steps on Monday to boost the ailing U.S. economy and ease the housing crisis in a pitch for support from blue-collar workers ahead of next month's presidential showdown with Barack Obama in Pennsylvania.

Clinton called for President George W. Bush to appoint a high-level group of economic experts led by former Federal Reserve Chairmen Alan Greenspan and Paul Volcker and former Treasury Secretary Robert Rubin to determine if the government should buy up homes to stem the country's housing crisis.

The New York senator and former first lady said the Federal Housing Administration should stand ready to buy, restructure and resell failed mortgages to strengthen the ailing economy.

"Just as it has in the past, this kind of temporary measure by the government could give our economy the boost it needs and families the help they need," Clinton said in a speech in Philadelphia.

"It would not require a single new government bureaucracy, and would be designed to be self-financing over time -- so it would cost taxpayers nothing in the long run," she said.

Clinton said she would propose legislation to provide mortgage companies with protection against the threat of lawsuits from investors who have bought the loans.

"Many mortgage companies are reluctant to help families restructure their mortgages because they're afraid of being sued by the investment banks, the private equity firms and others who actually own the mortgage papers," she said.

Clinton is in a heated battle with Obama, an Illinois senator, for the Democratic nomination to face Republican presidential candidate John McCain in November's election.