Mark Trahant: Financial system rivals natural disaster

"Line by line a national narrative is being advanced: We're going to rescue (fill in the blank) from the mortgage catastrophe. I say "fill in the blank" because we don't yet know whom or what will be helped. Both Congress and the Bush administration are looking for ways to scribble names into that space.

By any measure, the size of this calamity rivals that of a natural disaster.

About 600,000 Americans already are facing foreclosure -- and about 2 million subprime mortgages were supposed to reset in the next year and a half. The word "reset" doesn't sound as bad as an absolute order for families to tack on an additional $400 or $500 a month on their current house payment.

"Some homeowners will be able to afford their new payments without trouble and many others will qualify for a refinanced, fixed-rate mortgage on their own," said U.S. Treasury Undersecretary for Domestic Finance Robert Steel.

"Other homeowners, however, have stretched too far beyond their means or have made bets on the housing market, buying up multiple houses expecting to make a profit. Unfortunately, for many of these borrowers, foreclosure is inevitable," Steel said last week. "And let me be clear -- we have no interest in bailing out speculators. Our concern is for the Americans who are struggling to make payments on their primary residence. Our challenge in Washington has been to work with the private sector to identify the group of homeowners who, with a bit of assistance, can stay in their homes."

That's one part of the mystery blank name, the names of homeowners who could be helped to stay put."

Get the Story:
Mark Trahant: U.S. financial system sorely tested (The Seattle Post-Intelligencer 12/2)

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