It's Getting Harder for Paulson to Spin Housing Collapse

[Nbadan]

Paulson: Tough response needed for housing
Treasury Secretary says U.S. housing crisis is ‘significant’ economic risk

WASHINGTON - Treasury Secretary Henry Paulson called Tuesday for an aggressive response to deal with an unfolding housing crisis that he said presents a significant risk to the economy. In the administration’s most detailed reaction to the steepest housing slump in 16 years, Paulson said that government and the financial industry should provide immediate help for homeowners trying to refinance current mortgages before they reset at much higher rates.

He also called for an overhaul of laws and regulations governing mortgage lending to halt abusive practices that contributed to the current crisis.

“Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy,” Paulson said in a speech delivered at Georgetown University’s law school. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”

In his most somber assessment of the crisis to date, Paulson said that the housing correction is “not ending as quickly” as it had appeared it would and that “it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.”

So, all the optimistic predictions about the resiliency of the economy aren't working out like the Treasury crony predicted and this is news? This man must never pick up a paper........

[Wild Cobra]

I'm tired of the spin anyway. I believe the housing slump is because of the cascading of inexperienced investors trying to make a buck flipping houses. This drove the housing prices well above their true value, and that's why the market flopped. I don't think the housing market will gain momentum again until the prices fall back to reasonable levels.

[xrayzebra]

True enough WC, but mortgage lenders have to share the blame.
They made bad loans and when banks bought these loans, knowing
they were based on shaky grounds, the got caught too. I have
little sympathy for them. And feel they need to take their lost.
The buyers also have to share the blame. Most knew what they
could afford. But good old Uncle Sugar will try and fix things
for everyone and more than likely screw it up even worst.

[1369]

Just curious, anyone know what is the percentage of subprime loans in default compared to the total loan number? I'd also be curious to know what the percentage of conventional fixed rate loans in default are and whether or not that number has moved any significant amount during this "crisis".