By Jeff Mason
PHILADELPHIA (Reuters) - Democrat Hillary Clinton proposedsteps on Monday to boost the ailing U.S. economy and ease thehousing crisis in a pitch for support from blue-collar workersahead of next month's presidential showdown with Barack Obamain Pennsylvania.
Clinton called for President George W. Bush to appoint ahigh-level group of economic experts led by former FederalReserve Chairmen Alan Greenspan and Paul Volcker and formerTreasury Secretary Robert Rubin to determine if the governmentshould buy up homes to stem the country's housing crisis.
The New York senator and former first lady said the FederalHousing Administration should stand ready to buy, restructureand resell failed mortgages to strengthen the ailing economy.
"Just as it has in the past, this kind of temporary measureby the government could give our economy the boost it needs andfamilies the help they need," Clinton said in a speech inPhiladelphia.
"It would not require a single new government bureaucracy,and would be designed to be self-financing over time -- so itwould cost taxpayers nothing in the long run," she said.
Clinton said she would propose legislation to providemortgage companies with protection against the threat oflawsuits from investors who have bought the loans.
"Many mortgage companies are reluctant to help familiesrestructure their mortgages because they're afraid of beingsued by the investment banks, the private equity firms andothers who actually own the mortgage papers," she said.
Clinton is in a heated battle with Obama, an Illinoissenator, for the Democratic nomination to face Republicanpresidential candidate John McCain in November's election.
Their next battleground is Pennsylvania, a state with alarge bloc of blue-collar workers who have been a pillar of hersupport. Clinton has emphasized her economic leadership whilecampaigning in states like Pennsylvania, which has been hardhit by the housing crisis and job losses.
Obama campaign manager David Plouffe said her proposalswere in line with steps Obama has proposed, including a call byObama for a homeownership summit. But Plouffe said Clinton wasnot in a position to carry through on her promises because shehad taken contributions from special-interest lobbyists.
"She would operate within the current system and has saidthat repeatedly. Our belief is we need to change the system,"Plouffe told reporters.
Clinton endorsed legislation in Congress proposed byDemocratic Rep. Barney Frank of Massachusetts and Sen. ChrisDodd of Connecticut to expand the government's capacity tostand behind mortgages that are reworked on affordable terms.
Under the plan, the government would take failing mortgagesoff the hands of investors and write new terms that wouldprevent foreclosure. It would see lenders write down themortgage amount in exchange for a government guarantee.
But she said a bipartisan group should determine whetherthat approach was sufficient or whether the U.S. governmentshould be more proactive and step in as a temporary purchaser.
With the April 22 vote in Pennsylvania still weeks away,both candidates have been making policy speeches and laying thegroundwork for a lengthy campaign that is likely to stretchthrough the end of the primaries in June.
Obama leads Clinton among pledged delegates who will voteon the nominee at the party convention in August, but bothcandidates are wooing the nearly 800 super delegates who arenot bound to support a candidate and who are likely to decidethe nomination.
In her speech, Clinton also repeated her proposal made lastweek for a new economic stimulus package that would focus onthe housing slump.
The proposal includes a $30 billion (15 billion pound)emergency housing fund to put cash in the hands of localgovernments and nonprofit organizations to buy and resellproperties to low-income people or turn them into affordablerental housing units.
(Writing by John Whitesides; editing by David Wiessler )
(To read more about the U.S. political campaign, visitReuters "Tales from the Trail: 2008" online athttp:blogs.reuters.com/trail08/)
