ON TUESDAY, the Mortgage Bankers Assn. announced rising quarterly home foreclosure rates. The Dow Jones industrial average plunged almost 250 points. The chairman of the Senate Banking Committee speculated that millions could lose their homes.
It's scary stuff. But not so scary that anyone needs to raise the possibility of a federal bailout. This means you, Sen. Christopher J. Dodd (D-Conn.).
Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, has been keeping an eye on sub-prime loans, which charge higher interest and go to more risky borrowers, for months. He and Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, have promised legislation to rein in predatory lending practices.
On Tuesday, Dodd took things a step further, suggesting that the federal government could offer financial assistance to at-risk homeowners. He offered no specifics, telling reporters only that the government needs to provide at-risk homeowners "forbearance or something like that" to help them "work through" their debts. "For these consumers," Dodd said in a speech to the National League of Cities, "the American dream will become the American nightmare."