<p><u>Here is a selection of editorial opinions from across the country:</u></p>
<p><strong>No bailout<br class="br" />
</strong><em>By THE WASHINGTON TIMES</em><br class="br" />
<br class="br" />
With nearly $400 billion in adjustable-rate subprime mortgages scheduled to experience significant increases in their interest rates next year, Treasury Secretary Hank Paulson has outlined the possible terms of an ill-advised election-year taxpayer bailout for an indeterminate number of distressed homeowners and the investors who hold the homeowners' deteriorating subprime mortgages in their asset portfolios.</p>
<p class="loose">Meanwhile, other subprime-mortgage investors stand to see the value of their assets plummet as the government puts intense pressure on them to freeze for several years the teaser interest rates that are about to reset to higher levels. On the other hand, in the likely event that the upward interest-rate reset would tip many of these mortgages into foreclosure, those assets may already be worth much less than their nominal value today...</p>
<p class="loose">...At a minimum, the beneficiaries of any taxpayer bailout ought to absorb those costs by lengthening the mortgage for the borrower and diverting to state and local governments a portion of the interest revenue received by the investor from the revitalized mortgage.</p>
<p class="loose"><strong>HELP ON THE WAY IN MORTGAGE MESS<br class="br" />
<em>St. Petersburg Times</em> (FL)</strong></p>
<p class="loose">"With the news about the number of foreclosures nearly doubling from last October to this year, and with interest rates set to increase next year on another $362-billion in adjustable-rate subprime mortgages, various agencies of government are finally waking up to the depths of this crisis and becoming engaged.</p>
<p class="loose">Perhaps most promising is the active participation of Treasury Department in trying to negotiate a wholesale agreement among mortgage-related companies that would potentially keep hundreds of thousands of Americans in their homes.</p>
<p class="loose">Rather than leave it to lenders to negotiate individually with every homeowner in trouble, the Bush administration is trying to convince a coalition of major financial institutions to freeze rates for all those borrowers who could meet their current mortgage payments under some new arrangement. The gritty details, such as which borrowers would qualify and how long the freeze would last, are still under discussion, but any move in this direction is welcome..."</p>
<p><strong>Imperfect deal on mortgages</strong></p>
<p><strong><em>The Boston Globe</em></strong></p>
<p><strong></strong>TO HELP some overburdened homeowners avoid foreclosure, President Bush yesterday announced a five-year freeze on interest rates for certain types of adjustable rate mortgages. Amid a spiraling credit crisis sparked by the meltdown of the high-risk mortgage sector, the US Treasury negotiated an agreement with lenders and securities investors. The basic deal would maintain the initial "teaser" rates on adjustable-rate mortgages for now, rather than letting them reset upward.</p>
<p class="loose">While the deal should help, some caveats are in order. It will ease the way for subprime mortgage holders with the best chance of keeping their homes, but it will not make the broader financial crisis go away. And it is still unclear whether investors in securities based on risky mortgages will go along...</p>
<p class="loose">The subprime mortgage debacle represents one of the greatest failures of US financial regulation. Investors bought securities based on high-risk mortgages that, at best, stretched buyers' ability to repay. Yesterday, President Bush was quick to note that the government was not saving people from their own bad decisions. At this point, though, the health of a fragile economy depends upon whether the administration and the Fed can engineer a careful resolution to the subprime mess. Yesterday's deal is at least a start.</p>
<p><strong>THE GUILTY PARTIES. Blame federal neglect - from Bush on down - for the massive mortgage meltdown</strong></p>
<p><em><strong>Daily News</strong></em> <strong>(New York)</strong></p>
<p>The national mortgage meltdown is fast growing into a full-scale economic catastrophe - one that some experts believe could balloon into the country's most serious economic challenge since the Great Depression.</p>
<p class="loose">If that happens, a heavy measure of blame will lie with Washington's stewards of the economy - especially the Bush-Cheney administration and the Federal Reserve under longtime chairman Alan Greenspan, who ignored calls for sensible government controls on bank lending and allowed the housing loan market to spin out of control.</p>
<p class="loose">It's bad enough that more than 2 million Americans struggling to pay off high-cost subprime loans are at risk of losing their homes to foreclosure. Now the crisis is spreading far and wide:</p>
<p class="loose">The CEOs of Merrill Lynch and Citigroup recently resigned after disclosing that their companies lost $2.2 billion and as much as $11 billion, respectively, by purchasing multibillion-dollar bundles of shaky subprime loans.</p>
<p class="loose">Fannie Mae and Freddie Mac, the government-sponsored companies that own or guarantee 20% of all mortgages, have announced losses of at least $11 billion in the next year due to subprime defaults.</p>
<p class="loose">The values of American homes have dropped 5% over the past two years, and are expected to fall 12% by 2009, according to Moody's, the credit rating agency - the worst decline since 1945.</p>
<p class="loose">The U.S. Conference of Mayors says in a new report that the New York metro area will lose more than $10 billion in economic activity due to the subprime slowdown.</p>
<p class="loose">A spate of relief measures recently announced by the White House and Secretary of the Treasury Hank Paulson - a five-year freeze on interest rates and limited refinancing for some borrowers - might save an estimated 240,000 homeowners from foreclosure.</p>
<p class="loose">But they won't save the nation from years of evictions, bankruptcies, layoffs, plunging housing prices and tight credit that will make all sorts of loans harder to come by...</p>
<p class="loose">Other loosening of rules pushed by laissez-faire conservatives allowed banks to merge with insurance companies and high-flying Wall Street firms. By the mid-1990s, deregulation had scattered the risk and responsibility for shaky mortgages to the four winds.</p>
<p class="loose">Appraisers inflated the price of homes, and borrowers gladly borrowed against those artificial values. Lenders booked the mortgages and quickly sold them to Wall Street firms, which bundled the junky bonds and sold them off again - with top ratings by agencies like Moody's and Standard & Poors.</p>
<p class="loose">At every step of the process, people were earning quick money. But at the base of the growing financial pyramid were overstretched borrowers, whose high rate of default was all but ignored by federal regulators.</p>
<p class="loose">As late as 2004, New York and other states - alarmed by a jump in subprime foreclosures and evidence of bad borrowing - tried to rein in subprime lenders. But they were blocked by the Bush Treasury Department, which ordered banks to ignore attempts to impose state controls on subprime lending.</p>
<p class="loose">Beltway conservatives, including Greenspan, promised that the marketplace would make home ownership available to millions of Americans - and would automatically limit the amount of fraud and folly commited by lenders and borrowers.</p>
<p class="loose">It didn't turn out that way.</p>
<p class="loose">Intoxicated by greed, bankers, borrowers and brokers went on the financial equivalent of a drunken spree, while the federal government - hired to be the bouncer at the party - told the nation to order another round.</p>
<p class="loose">Now, the party's over. And America is about to learn all over again why government, sometimes, is the solution.</p>
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