Former Treasury Secretary Backs Large Downpayments

Washington, DC, Oct. 30, 2008--President Bush's first treasury secretary says Congress should scrap plans for a new economic stimulus package and instead require that no future home mortgage be awarded without a 20 percent down payment.

Paul O'Neill said Tuesday it doesn't surprise him that neither presidential candidate has endorsed his position, but he insisted it is the best way to quickly improve the nation's economic footing.

While he praised aspects of the recent $700 billion financial bailout, which he says has allowed world markets to take a "deep breath," O'Neill said there should have been government action to combat faulty home loans far earlier.

In 2006, he says, 30 percent of mortgages had no down payment and a large number of those buyers defaulted on their first payment.

If every mortgage was backed by a 20 percent down payment, O'Neill said, the financial system would be protected long-term, even if some individual investments or businesses failed.

"If you can't afford a home mortgage, we shouldn't give you one," he said.