October 10, 2008
Obama on McCain on buying up bad mortgages
Here’s Obama’s response to McCain’s mortgage buy-back proposal:
Senator McCain and I had a chance to talk about this the other night in Nashville. Some of you may have seen it. In that debate, he offered what he said was a new idea to help deal with the financial crisis, and that was to have the government – meaning taxpayers – buy up bad mortgages in America.
Well, the idea wasn’t particularly new. The authority for the Secretary of Treasury to buy and renegotiate bad mortgages is part of the financial rescue plan we just passed. In fact, I proposed it myself because, if it’s properly done and limited in scope, such buybacks can be one tool to help innocent homeowners stay in their homes on terms they can afford.
But I also said at the time that this should not be a vehicle to reward banks and lending institutions that recklessly wrote bad loans. It should not be a bailout for the high-rolling real estate speculators who took those loans to make a quick buck.
We have to act to fix our broken economy and restore the credit markets. But taxpayers shouldn’t be asked to pick up the tab for the very folks who helped create this crisis.
And that’s the problem with Senator McCain’s risky idea. On Tuesday night, his campaign said that he would ask the banks to absorb some of the cost by selling the bad mortgages to the government at a discount. Then, by Wednesday morning, he’d changed his mind and was proposing to bail out banks and lenders with taxpayer money.
Senator McCain actually wants the government to pay the full face value of mortgages on the books, even though they’re not worth that much anymore. It’s a plan that would guarantee that American taxpayers lose by handing over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess.
But it’s not just that the McCain bailout rewards irresponsible lenders, it’s that his bailout would make it more likely that those lenders keep up their bad behavior. Just yesterday, Countrywide, one of the nation’s largest lenders, reached an agreement to help homeowners refinance their mortgages. Under Senator McCain’s plan, lenders like Countrywide wouldn’t have any incentive to come forward and help homeowners – because they could just wait for the government to bail them out.
Now, this is just the latest in a series of shifting positions that Senator McCain has taken on this issue. His first response to this crisis in March was that homeowners shouldn’t get any help at all. Then, a few weeks ago, he put out a plan that basically ignored homeowners. And now, in the course of 12 hours, he’s ended up with a plan that punishes taxpayers, rewards banks, and won’t solve our housing crisis.
Well, I don’t think we can afford that kind of erratic and uncertain leadership in these uncertain times.
The whole thing will be up here in a few days, I assume.
