Christopher Dodd, the Senate banking committee chairman, insisted on Wednesday that any economic stimulus package for the US must go beyond short-term measures, proposing a new $10bn-$20bn fund that would buy outstanding mortgages at steep discounts to help distressed homeowners.

Laying out what he called a “very ambitious agenda” for the committee this year, the Connecticut Democrat suggested that any package should also include $10bn to allow local governments to buy foreclosed homes and resell them to homeowners.