January 30, 2008



Senator Chris Dodd (D-CT), Chairman of the Banking, Housing, and Urban Affairs Committee, today issued a statement in response to the Federal Reserve Board’s announcement to cut interest rates: “Today’s interest rate cut by the Federal Reserve and this morning’s data showing dramatically slower economic growth indicate that the problems that originated in the sub-prime mortgage market continue to reverberate through the financial system and the broader economy. While the Fed’s recent actions are encouraging, there are serious problems in our economy that need both long- and short-term solutions. “To address the current economic downturn, Congress needs to enact a stimulus package that is aggressive, innovative, and finds responsible ways that directly address the root cause of the problem. I will continue to contribute to ongoing efforts in Congress to that end. In addition to the short term steps that can be taken, we also need to focus on solutions to our longer-term problems. The Fed must address the crisis in the mortgage market which is at the core of the broader economic challenges that our nation now faces. The Fed’s failure to adequately carry out its duty over the past 13 years under the Home Ownership and Equity Protection Act (HOEPA) helped foster the current housing crisis, which is contributing to the economic problems we are facing today.” Dodd will chair a hearing tomorrow, entitled Strengthening our Economy: Foreclosure Prevention and Neighborhood Preservation, to examine ways to reduce the rising number of home foreclosures and to address problems in the mortgage markets in order to help keep people in their homes and to stimulate the U.S. economy. Dodd, who has tied the recent economic downturn to the foreclosure crisis, has urged leaders in Congress and the Administration to incorporate provisions that deal with the housing crisis in any stimulus bill they present to the President. Specifically, he has proposed the idea of a Federal Homeownership Preservation Corporation which would purchase outstanding mortgages at the steep discounts at which they are currently valued in the market, ensuring that families can keep their homes.