Can Washington Stop Economic Tailspin?

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WASHINGTON - Washington is working to resolve the country's economic problems on all fronts - from the financial sector to the housing market to the auto industry.

Bailout Plan Under Fire

While Congress moved at lightning speed to pass its $700 billion bailout plan to rescue Wall Street, many complained the government wasn't doing enough to help families living on Main Street.

Now the Bush administration is facing tough criticism over how the program is being handled.

"There has been a tremendous amount of focus on stabilizing the markets but not enough focus on helping people stay in their home," Rep. Carolyn Maloney said.

Under a new federal plan, borrowers would be eligible for lower interest rates or longer loan terms to help them stay in their homes.

The catch?

It only applies to home loans backed by Fannie Mae and Freddie Mac and requires the borrower to live in the home, be at least three months behind on payments, and not file for bankruptcy.

"These actions will allow delinquent borrowers an opportunity to keep their homes while they recover from their misfortunes, job loss or financial hardship," FHA Commissioner Brian Montgomery explained.

Other companies such as Citigroup are offering their own plans. But the problems in the housing sector are widespread.

Home values posted their 7th consecutive quarterly decline, and nearly one-third of Americans who sold their homes in the past year did so at a loss.

It's a move Terry Flowers is willing to make on her house in charlotte, North Carolina. It has been on the market for nearly two years.

"It is so frustrating," Flowers said. "I have tried and tried to stay positive, but it's really hard."

As the pool of bailout money starts to evaporate, lobbyists are lining up to petition for their share. 

Pelosi Calls for Aid for Automakers

It's not just financial firms that want a piece of the pie.

Other industries, like America's big three automakers, say they deserve the help - or their companies risk running out of money for daily operations.

House Speaker Nancy Pelosi wants Congress to hold a post-election session to work on emergency federal assistance for the industry.

Analysts predict an automaker failure could result in millions of lost jobs.

"The cost of keeping the industry going is a lot less than the cost of failure," said David Cole, director of the Center for Automotive Research.

An unguaranteed risk that more politicians seem unwilling to take.

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CBN News
John Jessup

John Jessup

CBN News Washington Correspondent

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