IMF Chief to Policymakers: Do More to Help Housing

August 29, 2011

IMF chief Christine Lagarde urged U.S. policymakers to do more to stop "the downward spiral of foreclosures, falling house prices, and deteriorating household spending." Lagarde’s comments came during an economic conference this weekend in Jackson Hole, Wyo. 

Lagarde said policymakers need to act more aggressively to reduce the amount of principal home owners owe on their mortgages. About one in four home owners are underwater in the country, owing more on their mortgages than their homes are currently worth. She also said the government needs to help more home owners take advantage of low mortgage rates by refinancing their loans to reduce their monthly payments. 

"The downside risks to the global economy are increasing," Lagarde said. "Those risks have been aggravated further by a deterioration in confidence and a growing sense that policymakers do not have the conviction, or simply are not willing, to take the decisions that are needed."

On Friday, Federal Reserve Chairman Ben Bernanke also urged Congress to work together to do more to stimulate the economy. While Bernanke did not announce any new steps to stimulate the economy, he said the Fed would discuss more options at its policy meeting at the end of September. One move being speculated that the Fed might take is doing a third round of bond purchases, which could lower long-term interest rates even more.

Source: “IMF Chief Urges US Policymakers to Help the Ailing Economy and the Struggling Housing Market,” Associated Press (Aug. 27, 2011)