Seeking economic answers

The Baltimore Sun

The latest economic plan offered by the Bush administration takes on a variety of players in the current crisis and offers some credible reforms. But while President Bush is talking about bolstering confidence in a financial system shaken by the housing bust, there is relatively little that he has suggested that can ease the growing insecurity felt by families in Maryland and elsewhere.

Tens of thousands of subprime loans to Maryland homeowners are expected to go into foreclosure in the next two years, according to a study by the Joint Economic Committee of Congress.

One avenue of help would be to allow bankruptcy court judges to provide relief to homeowners facing foreclosures. A bill that would do just that has been blocked by Republicans in Congress, but it should be approved.

Mr. Bush, who opposes bankruptcy court help, suggests instead programs offered by the Federal Housing Administration to help mortgage holders with good credit and mortgage industry-sponsored refinancing programs. But many homeowners in trouble wouldn't qualify for the former, and the latter programs are voluntary.

The administration last week also urged states to take a lead in tightening licensing standards for mortgage brokers and requiring better disclosure of mortgage lending terms. But that plan, proposed by Treasury Secretary Henry M. Paulson Jr., offers a long-term cure, not emergency help. Maryland is already headed in that direction, and state lawmakers should act quickly on a package of reform bills.

All of the assistance proposed thus far offers little promise of dealing with the more than $1 trillion in subprime mortgage loans currently outstanding. That looming challenge is undermining the confidence of lenders and has helped steer the national economy into recession.

In the meantime, Marylanders should take some comfort in the fact that while this state has not escaped the economic storm, a diverse economy, based in part on growing health care and national security spending, should help ease the pain here.

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