Dodd Speaks In Hartford On Foreclosure Legislation
Speaking To Business Group In Hartford, He Defends Need For Federal Intervention
By MARK PAZNIOKAS | Courant Staff Writer
May 13, 2008
Sen. Christopher J. Dodd told a Hartford business audience Monday that federal intervention is needed to stem the daily flood of 7,000 home foreclosure filings, a drag on the economy and a contributor to flagging consumer confidence.
"It is the contagion effect of all this that is spreading beyond housing," Dodd told the MetroHartford Alliance. "This issue is now affecting municipal finance, student loans, commercial mortgage-backed securities."
Dodd, the chairman of the Senate Banking Committee, has proposed legislation that would provide $1.7 billion over 10 years to insure troubled loans. Lenders would have to write-down loans, while borrowers would have to pay for the insurance.
The program is not an industry-wide bailout, but an effort to direct assistance to struggling borrowers whose mortgages are salvageable, Dodd said.
"This isn't for the speculator. It isn't for the person who never could afford the mortgage in the first place. It's that owner-occupied residence that's in deep trouble," Dodd said.
It also is likely to be a relatively modest effort.
In an analysis of a similar bill recently passed by the House, the Congressional Budget Office estimated that only 325,000 of the 2.8 million homeowners at risk of foreclosure would qualify for the proposed federal help.
Sensitive to complaints that he was proposing a bailout for those who made bad financial choices, Dodd said no one would be offered "a free ride."
The government has a broader interest in making sure "the next-door neighbors don't end up with a boarded-up property next door to them to force their property to lose value," Dodd said. "Everyone benefits from this."
Dodd could not identify for reporters after his speech how he would overcome a veto threat by President Bush.
"Inaction is not an answer. This is getting worse every day," Dodd said. "We've got as many as 15 million homes that have their debt exceed the equity in them right now."
Gov. M. Jodi Rell has promised to sign a state mortgage relief bill recently passed by the General Assembly with bipartisan support.
Bush is put off by the $1.7 billion price of the federal legislation, Dodd said.
"The president said that's too much money," Dodd said. "He didn't think it was too much money to take $29 billion to bail out Bear Stearns and J.P. Morgan Chase back in March."
Dodd also backed federal action to prevent the failure of Bear Stearns, which was taken over by J.P. Morgan Chase.
In an audience question-and-answer session, Dodd laughed with the crowd when asked if he had a vice presidential recommendation for Barack Obama. He glanced at Hartford Mayor Eddie A. Perez, who sat in the audience.
"Well, Eddie, are you ready for this job?" Dodd said. After the laughter subsided, he said, "I don't have a recommendation for him."
Dodd, who is seeking re-election to the Senate in 2010, said he had no regrets about his own year as a presidential candidate, despite failing to make a mark in the polls. He says he grew as a politician.
"I won't try it again, believe me," Dodd said.
Reprinted with permission of the Hartford Courant.
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