This editorial appeared in the Kansas City Star.
The Bush administration and Congress are struggling with huge economic challenges. But political leaders could certainly help calm the public — and the financial markets — if they could focus on three fundamentals: Stay ahead of the curve, set priorities for federal assistance and improve cooperation with each other.
Stay ahead of the curve. Federal officials this week announced a plan to help homeowners renegotiate delinquent loans held by mortgage giants Fannie Mae and Freddie Mac.
That’s fine, as far as it goes. But it obviously doesn't go far enough. For the most part, these are more conservative loans and are not at the heart of the current housing crisis.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said the plan "falls short of what is needed to achieve widespread modifications of distressed mortgages."
Such criticism could have been easily anticipated by Treasury Department officials. Yet they seemed taken aback by the complaints and responded with vague statements about considering additional measures later.
Another disconcerting development came Wednesday, when Treasury Secretary Henry Paulson announced the complete abandonment of the asset-purchase plan that was originally central to the $700 billion rescue plan.
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