Aug. 18, 2010 (United Press International) -- Wall Street traders apparently liked something they heard from Washington on the future of the $12 trillion U.S. mortgage financing market.
Treasury Secretary Timothy Geithner made it clear Tuesday the Obama administration was not contemplating walking away from the mortgage industry but said "fundamental change" in the system was necessary.
Geithner told bankers, mortgage experts and academics at a Washington housing-finance forum that continued government support was vital "to make sure that Americans can borrow at reasonable interest rates to buy a house even in a downturn."
Markets responded favorably to that indication of a future for the government-supported mortgage giants Fannie Mae and Freddie Mac -- as well as to a U.S. Commerce Department report that new home construction was higher in July, up 1.7 percent from June, to a seasonally adjusted annual rate of 546,000 units.
While there were few specifics at the housing conference, The New York Times said the question of whether the government should continue to support a low-cost, long-term, 30-year, fixed-rate mortgage is at the heart of the debate.
Fannie and Freddie may try to make lenders that originated bad loans in mortgage delinquencies repurchase the non-performing mortgages, The Wall Street Journal said. Bank of America (NYSE:BAC) said earlier this month it faced $11.1 billion in unresolved repurchase demands for loans gone bad.
Major markets all rose more than 1 percent after reports of an unsolicited $38.6 billion takeover offer for Canadian fertilizer giant Potash Corp. (TSX:POT) of Saskatchewan by Australian mining giant BHP Billiton. (OOTC:BHPLF) (NYSE:BHP)
The Dow Jones industrial average added 103.84 points, 1.01 percent, to 10,405.85. The Nasdaq Composite index was up 1.26 percent and the S&P 500 rose 1.22 percent.
Wednesday, BHP Billiton, the world's largest mining company, upped its hostile takeover bid for the world's largest fertilizer company to nearly $40 billion, saying it would take the offer directly to shareholders.
In addition to fertilizers vital for corn and soybean crops, Potash Corp. makes industrial and animal feed products.
"We firmly believe that Potash Corp. shareholders will find the certainty of a cash offer, at a premium of 32 percent to the 30-day trading day period average, very attractive, and we have therefore decided to make this offer directly to those shareholders, BHP Billiton Chairman Jacques Nasser said in a statement.
In international markets Wednesday, the Nikkei 225 index in Japan rose 0.86 percent and the Shanghai composite index lost 0.21 percent. The Hang Seng index in Hong Kong fell 0.54 percent and the Sensex in India rose 1.15.
In Australia, the S&P/ASX 200 index fell 0.05 percent.
In midday trading in Europe, the FTSE 100 index in London was down 0.46 while the DAX 30 in Germany rose 0.04 percent. The CAC 40 in France rose 0.05 percent and the pan-European DJ Stoxx 50 lost 0.15 percent.
