Democrat proposals provide template for borrower bailout

Broad government support for troubled borrowers looks more likely in the wake of Fed action on Bear Stearns. Bills put forward by two leading US politicians point to what form it might take

The likely shape of a government bailout of US mortgage borrowers became clearer last month with the release of two proposals from Democrat politicians representative Barney Frank and senator Christopher Dodd.

The proposals, which broadly mirror each other, aim to prevent a wave of foreclosures as US homeowners struggle to make payments on their loans and find themselves in negative equity after house price falls.

Until now, initiatives from the US Treasury and regulators had focused only on