White House split internally on foreclosure aid

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By Jon Ward, David Dickson THE WASHINGTON TIMES

The White House on Thursday tried to tamp down a push from inside the administration for a program that would spend taxpayer money on helping homeowners avoid foreclosure.

White House press secretary Dana Perino asserted that some within the government were trying to build support for the plan through leaks to the media.

"I've seen this happen in Washington before where people float out ideas in the media," she said. "What I can tell you is that we're in the middle of analyzing several different proposals."

Any trial balloons being floated are likely coming from the Federal Deposit Insurance Corp., sources said, although a spokesman denied the charge.

FDIC Chairman Sheila Bair has been outspoken in her support of a plan to extend help to homeowners who owe more on their mortgages than their houses are worth.

She has advocated for such a program for months and told Congress last week that her agency is "working closely and creatively with Treasury" to use part of the $700 billion economic rescue package for such aid.

But as reports have surfaced in the press that the administration is close to announcing a plan that would help 30 million homeowners and use $40 billion to $50 billion of taxpayer money, the White House and Treasury Department have slammed on the brakes.

"We've been reviewing a number of housing proposals for some time, and no decisions have been made on any of them. Any inference that we're 'nearing' a decision on any one of them is simply wrong," said White House deputy press secretary Tony Fratto.

Treasury spokeswoman Brookly McLaughlin said the same thing.

"No specific option has been decided on. It's very premature to assign any numbers to any of the proposals," she said.

Ms. McLaughlin said of Ms. Bair's proposal for homeowner help, outlined in general terms to Congress last week: "Of course we'll look at it."

FDIC spokesman Andrew Gray also said, "It would be premature to speculate about any final framework or parameters of a potential program."

But sources indicated that officials within the FDIC were likely the source of the leaks. Mr. Gray rejected the suggestion.

The White House said it has already acted to help homeowners. White House spokesman Carlton Carroll said that almost 3 million foreclosures have been prevented using federal programs since the beginning of the housing crisis.

There are currently about 55 million residential home loans in the U.S., and in August, Harvard economist Martin Feldstein estimated that 10 million households with mortgages owe more than their houses are worth.

The Federal Housing Administration has helped 400,000 homeowners renegotiate their loans with lenders, and the Hope Now program "brought together homeowners, lenders, mortgage servicers, and others to find ways to prevent foreclosures" for about 2.5 million homeowners, Mr. Carroll said.

"We haven't just started thinking about households facing foreclosure," said Edward P. Lazear, chairman of the president's council of economic advisers. "We started thinking about this over a year ago, last summer, when we rolled out FHASecure, and then there was Hope Now and Hope for Homeowners and so forth."

But so far, the administration has not earmarked any of the $700 billion for helping homeowners, a fact lamented publicly by Ms. Bair.

Legislators have allocated $250 billion for the purchase of preferred stock in banks. Other financial institutions, including insurance companies and auto-finance companies, are looking for a share. Congress has leverage because the administration must get congressional authorization to spend any amount above $350 billion.