ETF News

Banks to ask government to take bad loan risk: report

A foreclosed home is seen in this picture Chicago January 28, 2008. REUTERS/John Gress

NEW YORK (Reuters) - The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government, according to a report in the Wall Street Journal on Thursday.

One proposal has been advanced by officials at Credit Suisse Group CSGN.VX and would let the U.S. Federal Housing Administration guarantee mortgage refinancings by some delinquent borrowers, said the report.

The Credit Suisse plan would open the way for nearly 600,000 sub prime borrowers, many of whom are delinquent on their mortgages, to refinance into loans backed by the FHA, said the Journal, which cited a Credit Suisse spokeswoman.

The Journal said officials from JPMorgan Chase & Co. JPM.N are also pulling together their own proposal to expand the number of homeowners who could refinance into FHA-backed loans.

Spokespeople for Credit Suisse and JPMorgan were not immediately available.

Reporting by Yinka Adegoke; Editing by David Cowell