Barack Obama would consider ratcheting up support for the housing market if he wins the presidential election, a top adviser has told the Financial Times.
The Democratic candidate also believes that any fix for Fannie Mae and Freddie Mac, the troubled mortgage giants, must involve an overhaul of their business model, the aide said.
Jason Furman, economic policy director for the Obama campaign, told the FT: "It is likely that we are going to have to do more to tackle the housing crisis directly."
Mr Furman said Mr Obama would consider expanding a new programme known as the Frank-Dodd plan. Under this scheme, lenders willing to write down unsustainable loans can obtain government-backed refinancing.
"The Frank-Dodd legislation has a number of dials [controls] in terms of who qualifies, the amount of public subsidy, how much mortgages get written down," Mr Furman said.
"You can watch that programme and if it is not operating at sufficient scale you could look into changing some of the parameters. You could dial it up."
Mr Furman indicated that Mr Obama could back further intervention to support Fannie and Freddie, but said "there must be no bail-out" of "shareholders or management". Fannie and Freddie had a "problematic business model - heads they win, tails the taxpayer loses". He said: "Any fix for their problems needs to be part of a longer- term solution that revises that business model."
Mr Furman contrasted Mr Obama's activist approach to the housing crisis with the more laissez-faire approach of his Republican rival John McCain. "Barack Obama is proposing a second fiscal stimulus - rebates of $1,000 for each family and $50bn, half for infrastructure and half for the states. McCain is not."
Mr Furman said Mr Obama would ensure cash-strapped localities had the funds to pursue local solutions to housing problems.
He added: "Barack Obama supports changing the bankruptcy law to allow judges to write down mortgages in bankruptcy."
An Obama administration would not allow the crisis to deflect it from its longer-range economic agenda. "Part of the solution to the current crisis lies in putting in place policies that will deal with the long-term challenges facing our economy."
Austan Goolsbee, another Obama economic adviser, said the campaign planned to push back against what it saw as Mr McCain's distortions of Mr Obama's economic policies and hammer home the message of a $1,000 (€678, £541) tax cut for every blue-collar household.
"This is going to be a fight over who is going to be best for the average American and who will get the economy growing again in a way that benefits everyone and not just a wealthy, well-connected few," he said. "After the conventions and Labor Day [people] start comparing platforms - and as soon as anybody does that the choice will be clear."
Starting with Mr Obama's acceptance speech tomorrow night, which advisers say will address the concerns of blue-collar America "head on", the campaign plans to focus more closely on the economic anxieties of the middle classes.
Mr Furman and Mr Goolsbee both argued that the McCain campaign, with its advertisements alleging that Mr Obama would raise taxes and lower growth, had focused on attacking the Democratic nominee rather than extolling his own plans, which they argued bypassed middle-class Americans.
Mr Goolsbee said: "It is a question of who gets the tax cuts. The Obama plan gets tax relief to 95 per cent of working Americans."
America's crumbling housing market, Page 9 Lex, Page 12
