Hillary: Bailout Must Help Homeowners

Wants federal company to buy bad mortgages, address root causes
By Jason Farago,  Newser Staff
Posted Sep 25, 2008 7:09 AM CDT
Sen. Hillary Rodham Clinton, D-NY, addresses a New York news conference after a meeting at the Federal Reserve Bank in New York Monday, Sept. 22, 2008.    (AP Photo/Richard Drew)
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(Newser) – As Congress debates the terms of the $700 billion bailout, Hillary Clinton warns in a Wall Street Journal op-ed that "this is not just a financial crisis; it's an economic crisis." For the New York senator, any federal action has to tackle the underlying causes of the turmoil—starting with the $3 trillion in mortgage debt that set off the crisis and threatens millions with foreclosure.

Clinton proposes a new version of the Home Owners' Loan Corporation, a Depression-era government program that let homeowners refinance mortgages it bought from failed banks. A new HOLC would keep around 3 million Americans in their homes while turning a profit for the Treasury and providing support to struggling banks. "If we do not take action to address the crisis facing borrowers," writes Clinton, "we'll never solve the crisis facing lenders."