The competing versions of the US economic stimulus bill to be negotiated between the House of Representatives and the Senate this week contain little directly aimed at stabilising America’s ailing housing market.
Congressional Republicans have tried to introduce a broad plan to subsidise mortgages, and have succeeded in getting a smaller proposal adopted to give a tax credit to home buyers. But those ideas have come under fire even from some Republican supporting economists, who say they will do little to address the most troubled parts of the housing market.
The mortgage subsidy plan was a centrepiece of the Republicans’ proposal for an alternative stimulus to the versions pushed by the White House and congressional Democrats. The proposal would in essence cap mortgage rates at 4-4.5 per cent and would, proponents say, help stabilise house prices and prevent the downward spiral of falling asset values, bankrupt households and troubled lenders.