WASHINGTON – The stock market rebounded this morning on news that President George W. Bush would announce steps to help people with subprime mortgages to keep their homes, according to Bloomberg News.
At 10:52 a.m., the Standard & Poor’s 500 Index was up 13.59 points or 0.9 percent at 1,471.23, the Dow Jones Industrial Average was up 101.53 points or 0.8 percent at 13,340.26 and the Nasdaq Composite Index was up 22.2 points or 0.9 percent at 2,587.50, Bloomberg said.
The president’s plan, unveiled by Bush late this morning at the White House, calls for the Federal Housing Administration to guarantee loans for borrowers with good credit who cannot afford their mortgage payments, allowing them to avert foreclosure and refinance at more favorable rates.
“I plan to help homeowners – the government’s got a role to play,” Bush said in a statement. “But it’s not the government’s job to bail out speculators or those who made the decision to buy a home they couldn’t afford.”
Meanwhile, Federal Reserve Chairman Ben S. Bernanke told a gathering earlier this morning in Jackson Hole, Wyo., that the central bank “stands ready to take additional actions as needed to provide liquidity and promote the orderly functioning of markets.” The policymaking Federal Open Market Committee has been criticized for being more concerned about inflation at its last regular meeting, on Aug. 7, than it was about the credit-market collapse.
“It is not the responsibility of the Federal Reserve … to protect lenders and investors from the consequences of their financial decisions,” Bernanke said in his first public statement since the recent selloff forced policymakers to cut the Federal Reserve’s “discount rate” on direct loans to banks. “But the developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account.”
(The full text of Bernanke’s address this morning to the Kansas City Federal Reserve Bank’s annual symposium can be viewed here).
