"Tax relief," not a federal bailout that could lead to tax increasesis the answer to the subprime mortgage crisis, according to one of the key players in dealing with the crisis in the American homeowners market.
At a breakfast hosted by the Christian Science Monitor here in Washington, Secretary of the Treasury Henry Poulson voiced confidence that the U.S would ride out the subprime crisis and that the U.S. economy would continue to be vibrant.
“We are getting strength from growth outside the U.S.,” Poulson told us at the Monitor session at the Capital Hilton Hotel this morning, addressing the issues that are “top to me in early September.
“What’s going on is a repricing of risk along the capital markets. This is something that will take some time to work through,” but Poulson quickly added “there are no quick fixes.
“I think the positive here is that the markets turmoil is taking place against the backdrop of a strong global economy — as strong a global economy as I have seen in my business lifetime.
“I have been focused to a large extent on the advantages of markets outside the U.S. There was a small surplus in July, over the last year, exports have grown almost 15% and imports of grown 5%. Important to me and the American people that we keep our trade access
In specifically addressing the subprime mortgage crisis, Poulson pointed out that with the benefits of capital markets also come challenges. He also said that a “weakness in the housing sector” has been “an impediment ot growth.”
Pointing out that there are about ten million subprime mortage holders — some with what he called “challenged credit histories” — the treasury secretary underscored that tax relief will “make it easier to do the workouts.”
But what “we don’t need,” Poulson stressed, “are tax increases.”