Obama promises lower mortgage costs, new loans

Obama promises lower mortgage costs, new loans

President Barack Obama speaks prior to signing an executive order dealing with the Middle Class Working Families Taskforce, Friday, Jan. 30, 2009, in the East Room at the White House in Washington.

WASHINGTON (AP) -- President Barack Obama on Saturday promised to lower mortgage costs, offer job-creating loans for small businesses, get credit flowing and rein in free-spending executives as he readies a new road map for spending billions from the second installment of the financial rescue plan.

The White House is deciding how to structure the remaining half of the $700 billion that Congress approved last year to save financial institutions and lenders. An announcement was possible as early as this coming week on an approach that would use a range of tools to unfreeze credit, helping families and businesses.

At the end of a week that saw hundreds of thousands of people lose their jobs, Obama also used his Saturday radio and Internet address to tell that nation that "no one bill, no matter how comprehensive, can cure what ails our economy."

During the final three months of 2008, the economy recorded its worst downhill slide in a quarter-century, stumbling backward at a 3.8 percent pace, the government reported Friday. It could get worse.

Treasury Secretary Timothy Geithner is trying to finish a plan to overhaul the bailout program begun in the Bush administration. Geithner has said the administration is considering using a government-run "bad bank" to buy up financial institutions' bad assets. But some officials now say that option is gone because of potential costs.

Many ideas under consideration could end up costing hundreds of billions beyond the original price tag. Aides would not rule out the possibility that the administration would seek more than the $350 billion already set aside.

Obama said Geithner soon would announce a new strategy "for reviving our financial system that gets credit flowing to businesses and families. We'll help lower mortgage costs and extend loans to small businesses so they can create jobs. We'll ensure that CEOs are not draining funds that should be advancing our recovery."

His administration "will insist on unprecedented transparency, rigorous oversight and clear accountability so taxpayers know how their money is being spent and whether it is achieving results."

Obama's message, largely repackaged from a week of White House statements, was as much for the country as it was for lawmakers: Pass the separate American Recovery and Reinvestment Plan or things are going to get worse.

"Rarely in history has our country faced economic problems as devastating as this crisis," the president said. "Now is the time for those of us in Washington to live up to our responsibilities."

Obama last week won passage of a separate $825 billion economic stimulus plan in the House without a single Republican vote. It now heads to the Senate, where Vice President Joe Biden predicts the measure will fare better among GOP lawmakers.

Republicans pledged to work with Obama. But they cautioned against treating government spending like a "trillion-dollar Christmas list" and renewed their opposition to much in the bill.

"A problem that started on Wall Street is reaching deeper and deeper into Main Street. And the president is counting on members of Congress to come together in a spirit of bipartisanship to act," Senate Minority Leader Mitch McConnell, R-Ky., said in the GOP radio address. "Unfortunately, the plan that Democrats in Congress put forward this week falls far short of the president's vision for a bill that creates jobs and puts us on a path to long-term economic health."

Obama has signaled his willingness to compromise. His chief spokesman said the president hoped to "strengthen" the bill as it headed toward a Senate vote in the week ahead.

Republicans said they hope the administration takes into account their wishes.

"Every day brings more news of layoffs, home foreclosures and shuttered businesses," McConnell said. "And across the country, employers are cutting to the bone even at businesses that most Americans never thought were vulnerable."

Republicans, however, kept putting forward their own plans. McConnell promoted a mortgage program for creditworthy borrowers, offering fixed-rate 4 percent loans designed to increase housing demands and lending.