Treasury Sec. Paulson visits Bay Area

March 6, 2008 12:00:00 AM PST
One of the guardians of the U.S. economy is in the Bay Area on Thursday, and he's urging people to educate themselves about their finances -- as more bad news comes out of the housing market.

The mortgage bankers association announced today foreclosures soared to an all-time high in the final three months of last year.

Late payments reached 20 percent -- that's a record as well.

At the same time, the Federal Reserve says Americans' equity in their homes fell below 50 percent for the first time since record-keeping began in 1945.

Stocks dropped today following the negative news from the housing markets.

The Dow fell more than 214 points, the NASDAQ lost 52. The Bloomberg Silicon Valley Index dropped 11 points.

In the midst of all this, U.S. treasury Henry Paulson was in Oakland on Thursday, to talk about the importance of financial literacy.

Treasury Secretary Henry Paulson acknowledges that the sub-prime mortgage mess continues to be the biggest drag on the nation's economy.

He says both bankers and borrowers are to blame.

"What got us here was some very bad lending practices, some unethical lending practices, financial fraud. But also the other issue is there are a good number of people who signed a mortgage contract and didn't understand it," said U.S. Treasury Secretary Henry Paulson.

Paulson is meeting with Bay Area leaders to push homeowners to get educated about how the financial industry works.

He used an innovative program in Oakland's Fruitvale Neighborhood as an example. It's a partnership between bank of the west and an organization called operation hope.

"You might not be credit worthy to open an account. Instead of turning you away, the exciting part is we can refer you to Operation Hope," said Yolanda Stenmark from Bank of the West.

"They just looked at my credit and seeing if they could help me in that area and they could," said business owner Orestes Harris.

Orestes harries attended financial seminars offered by Operation Hope and has now opened his own small business.

Operation Hope is located just a few steps from the tellers at Bank of the West, but offers help to anyone.

"What I'm seeing is a lot of those people are in this mortgage crisis situation because they didn't look into their paperwork," said Irma Guerrero from Operation Hope.

But Paul Leonard of the non-profit Center for Responsible Lending believes financial literacy only goes so far.

"All the education in the world isn't going to be sufficient to prevent lenders and brokers who aren't looking out for the best interest of borrowers," said Paul Leonard from the Center for Responsible Lending.

On Thursday, secretary Paulson urged desperate homeowners to reach out for help.

"The sad truth is roughly half the people who lose their homes never talk to anyone before they go into foreclosure," said Paulson.

He says call 1-888-995-HOPE that's 888-995-4673 for counseling.