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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Kashkari: Lower Mortgage Rates Needed

Rep. Elijah Cummings (D-Md.) just asked Neel Kashkari, Treasury's man in charge of the $700 billion bailout/rescue, what advice he would give President-elect Barack Obama if he asked Kashkari for his best advice on how to keep homeowners in their homes.

"The best thing we can do as a country is to bring down mortgage rates so [homeowners] can refinance and get into long-term mortgages they can afford," Kashkari said, during a hearing of a subcommittee of the oversight committee underway now on the Hill.

"Congressman, I'm being very candid with you. As you know, the Fed has cut interest rates, but that has not led to lower mortgage rates because the markets are stuck," Kashkari said.

Cummings then asked Kashkari whether he would stay on at Treasury if Obama asked him to.

Kashkari paused, looked down, smiled a bit and said: "I would be very honored if the president-elect asked me, but I'd have to talk to my wife. It's been a hard two and a half years for her."

-- Frank Ahrens

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By Frank Ahrens  |  November 14, 2008; 11:49 AM ET
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Comments

Why not a fixed, fair mortgage rate for everyone? 4.5 percent for everyone with a current mortgage (loan modification) and for those seeking to purchase a home within the next few years. The government already provides financial institutions with access to inexpensive funds - it's about time that access trickled down to every consumer. Reward responsibility not irresponsibility; do not bail out corruption.

Posted by: justidealism | November 14, 2008 2:02 PM | Report abuse

I agree justidealism. The economic problems began with mortgages, so why not fix the mortgage problem in a way that keeps people in their homes. I know that mortgage rates are long term investments for mortgage holders vs the short-term, overnight rates that the Fed grants banks, but still, as you suggested, a mortgage rate drop of 1% or so from the current going rate would have a very broad impact. And, all that extra cash in homeowner's hands would go back into the economy where it is needed.

Posted by: cb1231 | November 14, 2008 2:09 PM | Report abuse

A reduction in interest would also serve to lower the interest rate deduction and increase tax revenue. Don't get me wrong. This is a good thing.

Posted by: twstroud | November 14, 2008 2:32 PM | Report abuse

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