US builders warn of ‘global financial meltdown’

24 September 2008 20:27  [Source: ICIS news]

WASHINGTON (ICIS news)--US home builders on Wednesday urged Congress to approve the Treasury Department’s controversial $700bn (€476bn) mortgage debt bailout plan, warning that failure to do so “could trigger a global financial meltdown”.


The National Association of Home Builders (NAHB) said it agrees with Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke that “immediate steps need to be taken to stem the financial crisis”.


Many Democrats and some Republicans in Congress are reluctant to accept the Treasury proposal as is, saying they want it to include provisions to ease foreclosures and to limit earnings of banking and investment firm executives whose companies will be rescued by the bailout plan.


However, the home builders trade group urged Congress to come to a resolution on the bailout plan quickly.


“The financial markets are in turmoil and the flow of credit has been severely curtailed for housing and other sectors of the economy,” said association president Sandy Dunn, echoing concerns raised earlier by Federal Reserve Board Chairman Ben Bernanke.


“There’s no time to waste,” Dunn said.  “Congress must pass legislation as soon as possible.”


Earlier on Wednesday the National Association of Realtors (NAR) reported that US existing home sales fell in August, saying that tight credit conditions brought on by the sub-prime mortgage crisis are dragging the housing sector down further.


Broader US business interests also have called for immediate congressional action, warning that the US could be facing economic collapse unless Congress acts.


The US housing industry, especially new home construction, is a key downstream consuming sector for chemicals and chemicals-derived products.


NAR said its board of directors voted unanimously to “call on Congress to act now before conditions deteriorate to a point that could trigger a global financial meltdown”.


Dunn said that the group’s 235,000 member contractors have been urged to contact their congressional representatives to urge immediate adoption of the Treasury plan.


President George Bush is to address the nation at 21:00 Washington time on Wednesday to further urge Congress to pass the bailout plan, the White House said.


($1 = €0.68)


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By: Joe Kamalick
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