Hearing of the US Senate Committee on Banking, Housing, and Urban Affairs - Turmoil in the US Credit Markets: Examining Proposals to Mitigate F

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SEN. JACK REED (D-RI): Just briefly, Mr. Chairman. Again, I want to commend you and Senator Shelby for holding the hearing and for your comments.

The fundamental assumption that most people on Wall Street had and most people around the kitchen tables in America was that housing prices would not go down. And for the last decade or more, they have been formulating their economic strategies based on that assumption. That assumption is not valid, and as long as they feel that there is no floor on housing prices, I think both decision making on Wall Street and Americans across the country won't get their financial traction, won't start spending again, won't start feeling comfortable about the future, and we have to act, I think, promptly to restore a floor.

There are various proposals. I think we can do an analysis. We must do analysis, but we have to act. And to date, the voluntary efforts of the administration have been modest at best in terms of reaching people who are in danger of foreclosure and also reaching people who are paying their mortgages but they're underwater. Their mortgage is much greater than the value of their home. And that means they're not going to go out and take money out to send children to college; they're not going to take money out to buy something, and again, this is all adding to a recession that is upon us. So I think we have to act, and I hope this hearing will give us insights for prompt a timely action.

Thank you, Mr. Chairman.

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