Treasury Secretary Henry Paulson said Thursday that various proposals being put forward to deal with the U.S. housing crisis would do more harm than good.
While he said the housing correction remains the biggest downside risk to the economy, the problems should be put in perspective. He said that 93 percent of all mortgages are being paid on time and that fewer than 2 percent are in foreclosure.
"So while some in Washington are proposing big interventions, most of the proposals I've seen would do more harm than good," Paulson said in remarks prepared for delivery Thursday night before the Economic Club of Chicago.
"I'm not interested in bailing out investors, lenders and speculators," he said. "I'm focused on solutions targeted at struggling homeowners who want to keep their homes."
Paulson's comments represented the strongest administration objection lodged so far to a variety of proposals being pushed by Democrats in Congress to do more to help in the housing crisis. Paulson said that dealing with the mortgage problems needed to be a shared responsibility.
"If borrowers aren't willing to ask for help or respond to efforts to reach them, there is only so much that others can or should do on their behalf," he said.
Earlier in the day, during testimony by Fed Chairman Ben Bernanke before the Senate Banking Committee, Sen. Robert Menendez (D-NJ), said the government’s response to the rise in foreclosures hasn’t gone far enough.
“My concern is we were behind the curve in trying to deal with the issue,” said Menendez. “And my concern is now we seem to be continuing behind the curve in stemming the hemorrhaging that's going on.”