WASHINGTON — WASHINGTON - Top lawmakers threw their support yesterday behind a proposal to use $24 billion in government funds to help struggling borrowers, as reports showed U.S. home prices sinking in four out of five cities and home builders reported their worst-ever business outlook.
With a clear and present threat to the U.S. economy, Democrats stepped up pressure on the Bush administration to direct taxpayer money to help more troubled borrowers. Massachusetts Democratic Rep. Barney Frank, chairman of the House Financial Services Committee, said "it is essential" to use some of the funds in the government's $700 billion financial rescue program to stem the tide of foreclosures.
Likewise, House Speaker Nancy Pelosi publicly urged Treasury Secretary Henry M. Paulson Jr. to support a proposal that would use some of the government's bailout funds to help about 1.5 million households avoid foreclosure.
But Paulson isn't budging.
"It is hard to imagine, no matter what program we have, that we're not going to have a good number of foreclosures," he said at a House hearing yesterday.
Paulson, testifying along with the heads of the Federal Reserve and the Federal Deposit Insurance Corp., two other crucial players in the economic rescue efforts, said they were focusing on economic stabilization, but Frank complained that the underlying problem of foreclosures was not being effectively addressed.
At one point, when Paulson said that "we've been working very, very aggressively at helping the individual," Frank interrupted, saying that pouring money into banks to strengthen them was no substitute for helping distressed homeowners - and cut the answer short.
Lawmakers' have the power to impose new conditions on the use of the bailout money, but new legislation appears unlikely before President-elect Barack Obama takes office in mid-January.
And any government aid won't rescue thousands of homeowners like Bernice Ramos, 39, of Antioch, Calif. She lost her home through foreclosure this month. She was part of a faith-based group, the Pico National Network, that came to Washington yesterday to press for more aid to homeowners.
"It's too late for me, but it's not late for millions of people that are [going] through the same pain," Ramos said outside the stone pillars of the Treasury Department, where dozens from the group staged a morning prayer session.
Meanwhile, the latest reports brought more bad news for the hobbled housing market.
