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Hillary Clinton Campaign Press Release - From the Senate: Senator Clinton Calls on President Bush To Provide Leadership on Mortgage Crisis

August 17, 2007

WASHINGTON, DC – Senator Hillary Rodham Clinton today called on the President to provide leadership in addressing the crisis in the housing market and its effect on the nation's financial markets. In a letter to President Bush, Senator Clinton noted that several months ago the Chairman of the Federal Reserve indicated that there would be minimal "spillover" of the subprime mortgage troubles to the rest of the economy and financial system. However, with the bankruptcies of several nationwide mortgage lenders, many more Americans facing the real threat of foreclosure and severe financial market volatility, she underscored that options to address the housing crisis should given more attention than they have been thus far by the Administration.

"Prudent steps should be seriously debated among federal policy makers to ensure that we are doing everything possible and are not casting a blind eye to the potential economic harm these credit problems could cause to both the national economy and to families facing distress," Senator Clinton wrote. "I urge you to begin an open and public dialogue among your economic advisors, the heads of the appropriate federal agencies, Members of Congress and leaders in the private sector to address the issues stemming from the credit market problems. I believe it is important and appropriate for you to demonstrate your willingness to at least discuss the various policy options at our disposal in this challenging market environment."

Senator Clinton has been a vocal advocate for taking action to address the growing crisis, help struggling homeowners and improve consumer protections. Senator Clinton has called for a series of steps to aid those holding subprime mortgages and mitigate the mortgage crisis, including:

  • Face-to-face financial counseling to be made available to more borrowers before they take out mortgages, and to homeowners at risk of foreclosure;
  • Restricting the use of prepayment penalties for responsible borrowers that repay their mortgages ahead of time;
  • Strengthening the Truth in Lending Act and existing federal regulations to ensure that there is plain-talk, no-fine-print disclosure.
  • Senator Clinton also reintroduced the 21st Century Housing Act to strengthen the Federal Housing Administration's (FHA) mortgage insurance program. Senator Clinton has emphasized that FHA loans should be available to more Americans, especially those who are drawn to the subprime market, as FHA backed mortgages are more stable and offer better terms than most subprime mortgages.

The following is the text of Senator Clinton's letter today to President Bush:

August 17, 2007

The Honorable George W. Bush

The White House

Washington, D.C. 20500

Dear Mr. President:

Americans are following the volatility in the markets with great concern. It appears that this volatility stems from the uncertainty confronting millions of Americans who are invested in our housing market, primarily as homeowners. With many Americans facing the threat of foreclosure, the high profile bankruptcies of several nationwide mortgage lenders, and investment funds suffering significant losses from their mortgage investments, it is no small surprise that these conditions have led to broader concerns about the availability of credit.

When I wrote Chairman Ben Bernanke this past May, it appeared that the Federal Reserve's and the Administration's views were that the problems in the subprime mortgage market were "limited" and that there would be no "significant spillovers from the subprime market to the rest of the economy or the financial system". At that time, I urged the Chairman to maintain vigilance to ensure that steps were taken to protect not only responsible homeowners and homebuyers from the fallout of the subprime market, but also to restore and maintain consumer confidence in our housing market and our economy.

However, despite the previous optimistic forecasts, it appears from the significant market losses of the past week that there indeed has been spillover from the subprime market to other components of the financial system. At the same time, you have predicted a "soft landing" for the housing market and you have also described the current challenges as a "necessary reaction to a flood of liquidity" that came into the market. While I certainly hope your assessment is accurate, I believe that it is important to remember that this is not simply a market correction, but a real issue with the financial well-being of millions of American families at stake.

Indeed, there is an inherent level of risk in our free market system. Nevertheless, I am concerned that your public statements may belie the significance of the current challenges facing the market. These challenges matter a great deal to American homeowners and prospective homebuyers. Your statements may signal an unwillingness from the Administration to consider even modest and sensible options that could help bring some stability to the housing market.

I do respect the need of federal policymakers to weigh new ideas carefully and to ensure that we do not take actions that have unforeseen negative consequences or whose purpose is solely to rescue major financial players. Nonetheless, prudent steps should be seriously debated among federal policymakers to ensure that we are doing everything possible and are not casting a blind eye to the potential economic harm these credit problems could cause to both the national economy and to families facing distress. I urge you to begin an open and public dialogue among your economic advisors, the heads of the appropriate federal agencies, Members of Congress and leaders in the private sector to address the issues stemming from the credit market problems. I believe it is important and appropriate for you to demonstrate your willingness to at least discuss the various policy options at our disposal in this challenging market environment.

Thank you for your attention to my concerns.

Sincerely yours,

Hillary Rodham Clinton

Hillary Clinton, Hillary Clinton Campaign Press Release - From the Senate: Senator Clinton Calls on President Bush To Provide Leadership on Mortgage Crisis Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/297327

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