Curbing Housing Concerns
Last week I had the opportunity to join several of my colleagues in a meeting with Federal Reserve Board Chairman Ben Bernanke. During that meeting Chairman Bernanke discussed the importance of the government taking responsible and timely actions to address the problems facing our housing market. He rightly emphasized that America's families and small businesses are feeling the squeeze of the economic and housing market uncertainties the most.
The problems facing the housing market are considerable. A number of home mortgage lenders extended high-risk home loans to individuals regardless of their history of being denied traditional mortgages. These irresponsible lenders were regularly processing loans for individuals who had low credit rates and an insufficient income to make the necessary house payments. This negligent practice has created record numbers of home foreclosures and a plunge in home values.
The situation has seemed to snowball and a variety of solutions are being offered in the House and Senate as ways to safeguard the economy and prevent a crisis of this magnitude from happening again. Right now a major overhaul bill that will provide tax breaks for businesses and homebuyers is being debated in the Senate. This legislation may prove useful for the long-term, but lawmakers are also trying to create a more immediate, short-term relief plan to help homeowners who are currently affected by the housing situation.
The market is facing a conundrum of sorts. One way to get out of the slump is for consumers to purchase homes. Unfortunately, their confidence to do so has been undermined by the uncertain market and economic conditions. Congress is debating a variety of solutions, including one that will give consumers tax credits for purchasing a home while the market rebuilds and consumer confidence in home buying recovers. This may be a viable solution, but our government cannot take the financial plunge of bailing out the risky lenders and buyers who reached beyond their means. Giving a "no strings attached" bail-out option to struggling subprime mortgage lenders is not the best option for our economy. Still, I believe some conservative, responsible actions have to be taken to make sure the housing market and banking industries do not collapse.
While we work towards finding a solution it is critical to make sure that America prospers both in the here-and-now and in the long-term. In the coming weeks I will continue to work with leaders like Chairman Bernanke to see that appropriate legislation is drafted. It must be a creative solution that boosts consumer confidence and alleviates real problems, but it cannot cripple the economy.