Thursday, December 20, 2007

Bush Says U.S. Economy Sound, People `Concerned' About Housing

``I'm concerned about the fact that Americans see their costs going up,'' Bush said today at a White House news conference. ``I know Americans are concerned about whether or not their neighbor may stay in their house.''

Although the nation's economic ``fundamentals are strong,'' the president said, his administration will ``consider all options'' to prevent a recession. He didn't give any specifics.
The economy has been battered by a slump in housing and a credit collapse caused by losses in the market for subprime mortgages. New York Senator Charles Schumer is among the Democrats in Congress and on the presidential campaign trail who have ripped Bush for what Schumer yesterday called the administration's ``serious mishandling'' of the economy and its response to mounting foreclosures.

Bush pointed to actions already taken to confront the housing slump. He and Treasury Secretary Henry Paulson earlier this month announced a plan negotiated with lenders and regulators to help as many as 1.2 million people keep their homes by freezing rates on some subprime adjustable-rate mortgages. He also signed legislation today to protect homeowners from being taxed on canceled debt when they refinance to head off a foreclosure.

``I made it clear we're not going to bail out lenders, and we're not going to help speculators, but we will help creditworthy people stay in their homes,'' he said.
Bush said he isn't troubled by Wall Street institutions turning to Asian and Middle Eastern governments for $25 billion to prop up balance sheets as they book losses on investments in securities that contain subprime home loans.

Morgan Stanley yesterday wrote down its subprime-infected mortgage holdings by $9.4 billion and received a $5 billion cash infusion from state-controlled China Investment Corp. Citigroup Inc., Bear Stearns Cos. and Zurich-based UBS AG also have received cash infusions from sovereign funds.

``I'm fine with capital coming in from overseas to help bolster financial institutions,'' Bush said today. ``What would be a problem is to say we're not going to accept foreign capital, or we're not going to open markets, or we've become protectionists.''
Subprime Losses

The losses from subprime mortgages are going to ``have to work through the system'' and Wall Street firms must be transparent about investments that have gone bad, he said. ``If there's some write-downs to be done, they need to do it now.''

The U.S. housing recession has slowed U.S. economic growth. The economy probably will slow this quarter to a 1 percent annual rate from a 4.9 percent pace in July to September, according to surveys of economists by Bloomberg News. Fed officials are predicting the expansion will slow to as little as 1.8 percent by the end of next year.

During the news conference, Bush congratulated Congress for finishing work on a ``good energy bill'' and making an adjustment to the tax code to prevent the alternative minimum tax from increasing levies on some 23 million households.

He expressed disappointment that lawmakers passed a measure to fund government operations in a catch-all spending bill. The legislation passed yesterday included funding for 9,800 pet projects of lawmakers, he said.

Florida Bad Credit Mortgage company Five Stars Mortgage provides alternatives to sub prime mortgages for their Florida clients.