Time for rescue

Our view: President Bush should stop fighting foreclosure aid

May 12, 2008

It's time for President Bush and Republicans in the Senate to stop playing politics and agree to support a plan to help rescue hundreds of thousands of families, including Marylanders, who are in danger of losing their homes to foreclosure. Mr. Bush has blasted the legislative plan agreed upon by a bipartisan majority in the House as a bailout for speculators and irresponsible borrowers, but his criticism is unfair. It's going to cost homeowners and lenders who participate in the rescue plan, but the nation will pay a heavier price if they aren't helped.

Lenders choosing to participate in the rescue plan would have to take a significant loss, allowing borrowers to replace their original high-interest-rate mortgages with more-affordable loans worth no more than 90 percent of their homes' new, lower value.

Plummeting home prices are having a serious effect on local government budgets, and declining home sales are having a broader negative impact on the economy. In recent days, Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Henry M. Paulson Jr. and other Bush administration officials have spoken positively of the House plan cobbled together by Rep. Barney Frank, chairman of the Financial Services Committee, with input from Republicans. Mr. Bernanke has warned that a rising tide of foreclosures is the most serious economic threat the nation faces.

President Bush's preference has been for mortgage lenders and borrowers to work out their differences in the current crisis without direct government involvement. But that clearly isn't working. The White House has criticized the rescue plan as a $300 billion bailout that attempts to shift costs to taxpayers. But the Congressional Budget Office estimates the cost at only $1.7 billion, a fraction of the expense of the Fed's bailout of subprime investment banker Bear Stearns.

Some Republicans have suggested that White House objections to the plan are not insurmountable. Any remaining questions should be quickly resolved and the legislation signed by Mr. Bush. That's the least he can do to help Americans hit by economic challenges from every direction.

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