No no no... I’m not talking about BushCo’s efforts to curb the housing crisis – although there is some movement from them on the economic front. Besides... we already know they come at everything from the right (err, wrong).
In this case, I’m talking about Sen. Obama’s plan to address this crisis, and how his proposals fall far a field from Hillary and Edward’s plans to address a problem that countless 2 million working Americans are facing right now / today.
Yeah I know... housing and mortgage rates aren’t exactly sexy issues. They’re not going to get folks fired up at campaign rallies but here’s the thing – we all have to live in something (house, condo or apartment) and most of us will sit down with a loan officer at some closing hoping like hell they aren’t ripping us off as we sign on the dotted line.
Hope will only get you so far – make the jump for more...
Hillary’s been talking about this problem for about a year now, and has released several plans to address this housing crisis and go after people who’re taking advantage of people with predatory lending practices. She also gave a speech back in March of last year, in which she called for action to address subprime lending practices (video included at this link).
She’s not new to these issues and is involved with efforts to find solutions to the problems that many are facing right now. Now normally I prefer to write about Hillary and her great record and proposals, but when her opponent goes after her plan in his stump speeches, I feel compelled to help set the record straight.
As you might have heard recently, Sen. Obama’s come out with a plan too and he’s been talking about the housing crisis on the stump. Take a look at something from the campaign about his speech, and the facts they present to refute BO’s claims...
Sen. Obama Launches Inaccurate Attack On Hillary's Plan To Curb Housing Crisis
2/19/2008 3:19:06 PM
Hillary has a plan to curb the foreclosure crisis by freezing rates on adjustable rate subprime loans. It was a policy also favored by Sen. Edwards. Barack Obama has no plan so he's chosen to go on the attack. From his event in Texas today:
She's proposed that we freeze the monthly rate on existing adjustable rate mortgages for at least five years. I disagree with that approach, although I'm sure it's well-intentioned, and here's why: it will reward people who made this problem worse. It will also reward people who are wealthy and don't need it. It won't just target the struggling home owners who need help the most. And on top of that, a blanket freeze as she's proposed will drive rates through the roof on people who are trying to get new mortgages to buy or refinance a home. Experts say the value of homes will fall even more, and even more families could face foreclosure. That's why one economic analyst called her plan "disastrous".
Sorry but I’ve got to interrupt this for a sec... one economic analyst? Hmmm... I wonder which of his campaign advisors that would be now (more on that in a minute).
And I’m sorry but that bolded bit above... WTF???? Seriously – has he even gone out there and talked to the folks at risk of losing their homes right now?
His argument is false, and based on a flawed report in the New Republic that assumes Hillary's plan applies to all adjustable rate mortgages and not just subprime adjustable rate mortgages. Subprime mortgages are overwhelmingly held by low-income individuals. Laura Tyson, professor of economics at the Hass School of Business at the University of California, Berkeley explained:
The rate freeze would give the housing market time to stabilize and would give mortgage servicers an opportunity to restructure unworkable mortgages and avoid unnecessary and costly foreclosures that harm both homeowners and investors. The rate freeze is critical because the 30 to 40 percent escalation in monthly payments is a major driver of defaults and ultimately foreclosures in the subprime mortgage market. Senator Clinton limits the proposed moratorium and rate freeze to subprime mortgages because the foreclosure crisis is disproportionately a subprime crisis. Subprime loans comprise less than 15 percent of all mortgages but more than 50 percent of foreclosures.
Thaler and Woodward are simply wrong when they describe the Senator's proposed rate freeze as applying to all adjustable rate mortgages and not just subprime ones. When corporations run into trouble meeting their obligations, creditors often arrange a "workout" that restructures the financial obligation by setting new payment terms, etc. Creditors don't do this under force of law. They do it voluntarily because it keeps their clients in business and it limits their own losses. Senator Clinton is proposing that banks do for families what they already do for big business.
Jon Corzine, who in addition to being a governor is the former head of Goldman Sachs, has said the following about Senator Clinton's plan: "I believe that her call for a 90-day moratorium on subprime foreclosures, a 5-year freeze in rates on subprime loans, and a $30 billion fund to help states fight foreclosures, is the right approach for tackling the mortgage crisis."
Sen. Obama is positioning himself to the right of President Bush. The Bush administration recently reached an agreement with the mortgage industry to implement a limited foreclosure moratorium and a loan modification program that could result in rate freezes for at-risk borrowers. In December, the administration announced another plan that also called for a rate freeze for qualified at-risk homeowners.
While this plan is not sufficient, it goes farther than Sen. Obama.
More on Hillary's plan to curb the housing crisis HERE.
(Emphasis added)
Now that all went down – and up on to the web – a few days ago. Hillary issued the following statement this morning that I think is worth a mention as a follow up. People are hurting out there and she’s talking about (and working to solve) a problem that tens (if not hundreds) of thousands of 2 million Americans are struggling with right now...
Statement from Hillary Rodham Clinton
"The administration made a critical mistake when it failed to address the housing crisis as part of its economic stimulus plan, and so it's encouraging that it is now considering proposals like the ones I've been advocating for the last year.
"We cannot jumpstart the economy without addressing the housing crisis. The fact that George Bush is starting to understand that reality but Senator Obama still does not should trouble all those concerned about how the housing crisis is impacting the economy.
"This is something that I recognized early on, and that is why my stimulus proposal called for $30 billion in assistance to states, cities and communities to help them fight foreclosures. It is also why I have called for a 90-day foreclosure moratorium on subprime mortgages, and a freeze of at least 5 years in the monthly payments on subprime adjustable rate mortgages. In addition, I have introduced the Mortgage Refinancing Initiative Act to enable state housing agencies to replace unworkable mortgages with loans that families can afford. I have introduced legislation to modernize the FHA so that it can play a stabilizing role in the housing market. And I have long called for expanding the foreclosure prevention programs at HUD, Fannie Mae, and Freddie Mac.
"I am the only candidate with a comprehensive plan to end the housing crisis. My plan is a workout, not a bailout, that will keep families in their homes and help halt our economy's slide into recession. I have proposed real solutions to the very real problems facing our country. Upwards of 2 million families are at risk of losing their homes. The fall in home values has already erased an estimated $1.6 trillion in household wealth. America needs a president who leads when economic challenges arise. I will be that President, and I will work hard every day to solve our nation's problems."
Now back to that above reference to economic analysts...
I was kidding when I implied that they were from BO’s camp. As I understand it, this one analyst he mentioned in that stump speech turned out to be a supporter not working within his campaign – but still someone with a horse in this race. Either way, BO’s got some pretty conservative guys working for him – This Huffington Post article, "Obama's Conservative Economists," comes from Stephen Schlesinger, former Director of the World Policy Institute at the New School University and the son of Arthur Schlesinger. In it, he talks about an article in the Nation magazine by Max Fraser, which examines how BO’s economic advisors are helping him go at this subprime lending crisis from the right of both Edwards and Hillary. Take a look...
Fraser notes that Obama's proposed solution to the mortgage mess is "short on aggressive government involvement and infused with conservative rhetoric about fiscal responsibility. " He states that Obama has not called for a moratorium on foreclosures or a freezing of interest rates or the use of federal subsidies to help homeowners keep up with payments and restructure loans or some regulation of the financial industry — Edwards and Clinton have offered variations on those themes. Instead Obama has proposed legislation against mortgage fraud, a tax credit for homeowners which amounts to about $500 on average and an additional fund that will help a certain limited number of homeowners.
Fraser attributes Obama's constricted response to "the centrist politics of his three chief economic advisors and his campaign's ties to Wall Street institutions opposed to increased financial regulations" and points out that Obama has received almost $10 million in contributions from the finance insurance and real estate sector through October 2007.
He closes by noting that BO’s tepid response to this crisis is more that of someone coming from a Republican angle rather than a Democratic one, and urges further examination of his plan.
Those advisors of his might explain why – in addition to offering up these half measures in the face of the housing crisis - BO’s health care reform plan stops short of Universal health care coverage for all of us, leaving out mandates for adults (while including them for children) and leaving behind some 15 million of us.
But that’s another issue, for another day.
Update
Number of Americans facing foreclosure is 2 million - rather than the numbers I noted above. Updated to correct that.