AMI says UK should follow US example

The Association of Mortgage Intermediaries is calling on both Sir James Crosby and the UK government to follow the example set by the US in its attempt to rectify the capital markets.

AMI has welcomed the move from the US government to take control of Fannie Mae and Freddie Mac.

Chris Cummings, director-general of AMI, says: “The most interesting part of the rescue plan is that the US Government will begin to buy Mortgage Backed Securities. This move will directly address the capital markets and we believe this will have the biggest single impact.

“It will help to bring confidence and entice more entrants into the market and thus will free up liquidity. An injection of new capital into the market is needed if we are to achieve some stability.”

Cummings says the £50bn that has been allocated to Fannie and Freddie may end up closer to £200bn, placing additional burden on the US government as well as taxpayers.

But he adds: “This move by the US government is indicative of the scale of the problem and clearly signals a desire to help the wider economy which is now suffering as a result of the problems in the mortgage market.”

“This is the US endeavouring to fix capital markets in contrast to the announcement last week by the UK government, which only sought to deal with retail markets.

“We urge Sir James Crosby to study the US action and to produce a considered and relevant response when he reports to the chancellor in September. Work is needed to fix the capital markets and the US has shown the way.”