Clinton Urges Foreclosures Moratorium
Thursday December 6, 2007 6:01 AM
By SAMANTHA GROSS
Associated Press Writer
NEW YORK (AP) - Democrat Hillary Rodham Clinton called on Wall Street to accept some responsibility for the home foreclosure crisis, saying Wednesday the financial sector gave mortgages to people who were unlikely to be able to make repayments.
``I believe Wall Street shifted risk away from people who knew what was going on, onto people who did not,'' the New York senator told a gathering of business leaders at the NASDAQ Marketsite in Times Square.
The Democratic presidential candidate proposed several steps to forestall mortgage foreclosures, including a 90-day moratorium on further loan foreclosures on owner-occupied homes and a freeze that would keep subprime mortgage rates from rising for at least five years.
Clinton spoke a day before the Bush administration's expected announcement of its own plan to address the mortgage crisis. Congressional aides told The Associated Press the administration's deal would include a provision for a five-year freeze on interest rates for certain subprime mortgages. The aides spoke on condition of anonymity because the details have not yet been released.
In a statement issued after her speech, Clinton raised concerns that the administration's plan could leave out a number of homeowners and called for a ``more comprehensive approach.'' This week, she sent a letter to Treasury Secretary Henry Paulson saying the administration had been slow to react to the crisis.
Clinton also called for public status reports on the number of adjustable-rate mortgages that are converted to fixed-rate loans. She said she wanted to eliminate penalties on those who repay their mortgages early and increase the availability of financial counseling.
An estimated 2 million subprime mortgages, loans offered to borrowers with spotty credit histories, are scheduled to reset to much higher levels by the end of 2008. Those resets will push the payment on a typical mortgage up by $350 per month, taking it from $1,200 currently to $1,550.
Clinton called on the assembled business leaders to make sacrifices for the greater good, telling them that economic growth was only a success if it ``lifts up'' hardworking families with fewer means.
Still, her tone was less direct than that of rival Sen. Barack Obama when he spoke at the same forum in September.
He told the group that Wall Street has been too focused on its own gain at the expense of struggling Americans, saying that many - including ``almost everyone in this room - have not always concerned themselves with the losers in this new economy.''
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