Adding to sweeping government actions announced to alleviate the financial crisis, Treasury Secretary Henry Paulson Jr. this morning proposed new measures aimed at buying bad mortgages and distressed debt.
In a press conference, Mr. Paulson called on the federal government to implement a program to remove illiquid mortgage assets that are threatening the economy and to create a program that is “ufficiently large”to have a “maximum impact” while shielding taxpayers to the greatest extent possible.
When asked by a reporter how large the program needs to be, he replied, “hundreds of billions of dollars.”
Under the terms of his plan, the government would provide additional funding to Fannie Mae of Washington and Freddie Mac of McLean, Va., that would in turn increase their purchases of mortgage-backed securities.
Additionally, Mr. Paulson called on the government to increase the availability of capital for new home loans and asked for the Treasury to expand the mortgage-backed securities program that was announced earlier in the month (InvestmentNews, Sept. 8).
President George W. Bush, speaking after Mr. Paulson, endorsed the plan and urged Congress to move quickly to enact the measures.
The Securities Industry and Financial Markets Association of Washington likewise endorsed the plan.
“Today Secretary Paulson laid out such an approach and it is bold and very necessary. We are encouraged by Congress' early reception to this plan and hope it will move with haste to approve it,” T. Timothy Ryan, Jr., president and chief executive of SIFMA, said in a statement.
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