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APPROPRIATIONS.
At last night's debate, John McCain proposed a $300 billion rescue plan for Americans with sub-prime mortgages, in which the Treasury Department would buy such mortgages back and, if their holders proved to be sufficiently financially stable, would convert them into fixed-rate loans.
The Obama campaign responded that the bailout package passed by Congress already grants such powers to the Secretary of the Treasury, and that Obama floated this idea two weeks ago. And as I reported on Sept. 22, Bill Clinton has been talking about the mortgage conversion idea in the form of a Depression style Homeowners' Loan Corporation. Three days later, Hillary Clinton floated such a plan in a Wall Street Journal op-ed.
Is McCain's proposal as strong? No. A key weakness of the package that passed Congress is that it leaves too vague how the Federal Housing Authority and Treasury Secretary should go about the large scale refinancing of sub-primes. Democrats had proposed that bankruptcy judges be given such powers, but that provision was lost during negotiations. McCain's proposal is simply not as specific as it needs to be, as it does not create a structure through which refinancing can easily take place. Alongside the "Main Street/Wall Street" juxtaposition, this appears to be another clear rheotrical appropriation by McCain of a Democratic idea.
--Dana Goldstein
COMMENTS (4)
In last night's debate, Barack showed his ease and understanding of the complex problems and issues facing the American people today and his dedication to the middle class and to average Americans. He is emotionally and mentally connected to Americans of all colors, classes and creed and will work on the fairness and distibution of sharing, not just one segment -- the middle class -- carrying the load. Because he is committed to making a difference, he came across as serious and steadfast about fixing our problems and bringing America up to 21st Century standards and getting rid of a lot of programs that just do not work anymore. He knows and teaches that to be prosperous, America must grow from the bottom up, just as Nature grows from the bottom up. He also showed his mindset toward dealing with other countries. His willingness to listen and talk to be able to work problems out without having to go to war and shed unnecessary blood. Barack knows that we live in a global world and we are all in this together, and so we must work together on a world scale to address our global and world problems.
On the other hand, McCain Camp knows they will lose the election if they talk about the economy, they have no solutions for the middle class, because their Economics are for the Rich, the well-off and the well connected!
McCain "has been running a seamy campaign originally designed by the bad seed of conservative politics, Lee Atwater. Atwater relished teaching rich, white Republicans to feign a connection to the common man so they could get in office and economically undermine the common man. In the 1988 campaign, the Machiavellian ran to help George Bush Sr. defeat Michael Dukakis with this unholy quintet of charges:" (Maureen Dowd)
http://www.nytimes.com/2008/10/08/opinion/08dowd.html?_r=1
Posted by: Angellight | October 8, 2008 9:18 AM
The key question with mortgage buyback is, at what price?
The mortgage-backed securities that are based on these mortgages are clearly worth way less than face value. Therefore the underlying mortgages must be worth way less than face value too. If Uncle Sam buys the mortgages at face, we're overpaying like crazy, and it's a far better bailout deal for the banks than the Paulson plan was.
My question: can the Federal government use its eminent-domain powers to buy up the mortgages at market value, if appropriate enabling legislation is written? It could then restructure the mortgages to keep people in their homes, without taking a huge beating financially.
Posted by: low-tech cyclist | October 8, 2008 10:10 AM
A quick look at Wikipedia strongly suggests the answer to my question is: yes, the government can do that - that its eminent domain powers apply to personal as well as real property. While the Fifth Amendment requires "just compensation," that's generally been interpreted as fair market value. And while Bush's executive order in response to the Kelo case might be seen as blocking this option, the next President could countermand that on the afternoon of January 20.
So now all we need is the legislation.
Posted by: low-tech cyclist | October 8, 2008 10:29 AM
See Brad DeLong at John McCain's New Mortgage Plan Is Worse than I Had Imagined Possible, Even Given What I Know About John McCain.
According to DeLong, quoting Ben Smith and Victoria McGrane at Politico: "Details provided to reporters by [McCain] senior adviser Doug Holtz-Eakin Wednesday morning make one thing clear: Taxpayers would directly pick up the tab for the difference in cost between a homeowner’s old, too-expensive mortgage and the cheaper one provided by the government."
DeLong's takeaway: "John McCain wants to give $100 billion of taxpayers' money to America's worst-behaving mortgage financiers ... Democrats want to prevent depression and support the financial markets by investing taxpayer money in banks with troubled assets. Republicans want to give taxpayers money away to the shareholders and managers of banks with troubled assets."
Posted by: AndrewBW | October 8, 2008 3:59 PM