Below are selected excerpts of a transcript from a press conference held this morning -- and it's clear that Washington reporters had the US housing and mortgage markets on their minds.
Mr. President, I want to get your thoughts about the volatility in the financial markets, but specifically, a series of questions. Do you think that housing prices will continue to fall? Do you think that the inability of people to borrow money the way they used to is going to spillover into economy generally? And what are you prepared to do about it? And, specifically, are you considering some kind of government bailout for people who might lose their homes? THE PRESIDENT: ... one has got to look at ... the amount of liquidity in the system. In other words, is there enough liquidity to enable markets to be able to correct? And I am told there is enough liquidity in the system to enable markets to correct ... The word "bailout," I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don't support that. If you mean making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes, the answer is yes, I support that. One thing is for certain, is that there needs to be more transparency in the -- in financial documents ... We've had a lot of really hardworking Americans sign up for loans, and the truth of the matter is they probably didn't fully understand what they were signing up for. And therefore, I do believe it's a proper role for government to enhance financial education initiatives, and we're doing that, we've got money in the budget to do that. What's going on in the housing market, is it a correction or a crisis, in your view? Can you assess that? THE PRESIDENT: Yesterday I did comment upon that, that there was a -- I talked about the different scenarios that I had been briefed on about whether or not there would be a precipitous decline in housing or whether it would be what one would call a soft landing, and it appeared at this point that it looks we're headed for a soft landing. And that's what the facts say. Sir, getting back to the credit crunch caused by defaults in sub-prime mortgages, should Fannie Mae and Freddie Mac be allowed to buy mortgages beyond their current limits, or play any additional role that could help revive mortgage finance? THE PRESIDENT: As you know, we put up a robust reform package for these two institutions, a reform package that will cause them to focus on their core mission, first and foremost; a reform package that says like other lending institutions, there ought to be regulatory oversight. And therefore, first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options.