Bush prepared to help borrowers

31 August 2007

Sub-prime mortgage borrowers could receive help from the president, who is expected to outline reforms to the tax code.

Ben Bernanke, chairman of the Federal Reserve, will also speak on housing and monetary policy today, outlining what actions could be taken.

Lending in the US sub-prime market and hikes in interest rates have led to many poor people defaulting on mortgage payments.

A US administration official told Reuters: "He will also discuss reform efforts to prevent these kinds of problems from arising in the future."

President Bush will look for legislation that gives the Federal Housing Administration the ability to help sub-prime borrowers.

According to Reuters, this could give loans to people who are at least 90 days behind in their mortgage payments which would help them to avoid foreclosure.

Speaking to Reuters, Heino Ruland, a strategist with Steubing, said: "The market is betting on Ben Bernanke coming up with clear-cut statements that if the crisis intensifies he will reduce base rates.

"But with the Bush administration stepping in, he will be less forced to do so. If it's a combined effort, then that's a reason to be bullish."

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