Bonds News

Clinton proposes Greenspan lead foreclosure group

WHITE PLAINS, New York (Reuters) - Former Federal Reserve Chairman Alan Greenspan and other economic experts should determine whether the U.S. government needs to buy up homes to stem the country’s housing crisis, Democratic presidential candidate Hillary Clinton will propose on Monday.

Former U.S. Federal Reserve chairman Alan Greenspan speaks at the Per Jacobsson Foundation Lecture on the "Balance of Payments Imbalances" at the International Financial Corporation in Washington, October 21, 2007. REUTERS/Yuri Gripas

Clinton, a presidential candidate and senator from New York, said the Federal Housing Administration should “stand ready” to buy, restructure and resell failed mortgages to strengthen the ailing U.S. 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 will say, according to excerpts of remarks prepared for 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.”

Clinton threw her weight behind legislation proposed by Democrats Rep. Barney Frank of Massachusetts and Senator Chris Dodd of Connecticut that would “expand the government’s capacity to stand behind mortgages that are reworked on affordable terms.”

But she said a bipartisan group should determine whether that approach was sufficient or whether the U.S. government should step in as a temporary purchaser.

The working group could be led by bipartisan economic heavyweights such as Republican Greenspan, Democratic former Fed Chairman Paul Volcker and Robert Rubin, the treasury secretary under President Bill Clinton.

Under the Frank plan, the government would take failing mortgages off the hands of investors and write new terms that would prevent foreclosure. It would see lenders write down the mortgage amount in exchange for a government guarantee.

The former first lady has argued her experience makes her a stronger candidate than rival Barack Obama, a senator from Illinois, to steer the economy.

A focus on the housing crisis also appeals to the working class constituency that has been a big part of her support base. Clinton proposed last week that a new economic stimulus package be created to focus on the housing slump.

The proposal included a $30 billion emergency housing fund to put cash in the hands of local governments and nonprofit organizations to buy and resell properties to low-income people or turn them into affordable rental housing units.

editing by Patricia Wilson