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Thursday, February 19, 2009

US Govt pumps US$75b more into crashing housing sector

PHOENIX: President Barack Obama outlines US$75 billion (US$1 = RM3.66) more in government spending yesterday, a plan to pump money into the crashing housing sector to prevent millions of Americans from losing their homes.

The huge new infusion of federal money is designed to bring under control the mortgage foreclosure crisis amid the worst economic slump to hit the country since the Great Depression.

Obama's detailing of the new mortgage plan in the Arizona capital will be his second major attack on the symptoms of the US economic decline in as many days. On Tuesday he was in Denver to sign a US$787 billion economic stimulus bill - a mix of government spending and tax cuts - designed to reverse the US economic malaise.

But fighting the larger economic downturn depends heavily on ending the crisis in US housing, the sector that set the economy on its downward spiral last year and at one point threatened the country's banking system with collapse. Millions of Americans now find their homes worth much less than they owe on mortgages, while millions more - hit by shrinking incomes, unemployment and higher mortgage interest rates - have lost their homes or face that prospect.
Obama chose Arizona for the announcement because the state is one of the hardest hit by foreclosures.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," Obama said Tuesday as he signed the US$787 billion stimulus package in Denver.

The ambitious plan he was announcing at a Phoenix high school yesterday was expected to offer government cash to mortgage companies that reduce interest rates - and therefore monthly payments - for homeowners in danger of default, according to several people briefed on the plan. What remained unclear was how the government will decide who qualifies for relief.


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