Here's what Obama said this morning in Dayton:
DAYTON, Ohio (AFP) — Barack Obama slammed John McCain's plan to buy up 300 billion dollars in bad mortgages as "risky" on Thursday, and warned his White House rival was offering "erratic" leadership at a time of crisis.Did McCain change his plan?
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"Taxpayers shouldn't be asked to pick up the tab for the very folks who helped create this crisis," Obama said in a populist swipe at Wall Street finance firms, banks and "high rolling real estates speculators."
"That's the problem with Senator McCain's risky idea," Obama told a crowd of around 8,000 people in a minor league baseball stadium in the gritty city of Dayton.
"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," Obama said, arguing the government would have to assume the full cost of the program.
"Well, I don't think we can afford that kind of erratic and uncertain leadership in these uncertain times.
RCP: McCain's announcement at Tuesday's night's debate about of a new plan to buy bad mortgages and renegotiate them has been met with responses ranging from mystification to ridicule. Though the details that have emerged have been less than crystal clear, it seems the plan would cost an additional $300 billion above and beyond the $700 billion rescue package just passed by Congress.
But an email just distributed by McCain spokesman Tucker Bounds seems to indicate McCain's plan wouldn't be an add on program but instead be designed to redirect some of the $700 billion:
Please see our campaign's response to Barack Obama's event in Dayton, Ohio. During the event, Barack Obama attacked John McCain's proposal to use a greater proportion of the funds authorized by the legislative rescue plan to secure fixed-rate, affordable mortgages for American homeowners who are in danger of losing their homes. read the rest
I think the reason McCain announced it at the debate was so that it would fly over people's heads without media analysis. He wanted to give the illusion that he knows what he's doing. My question is: where are his economic advisers?
Politico: John McCain’s surprise policy offering Tuesday night to have the government buy bad mortgages is bold, sweeping and, well, a bit perplexing to nearly everyone.Here are the original details of the plan:
From economic experts to political pundits, from liberals to conservatives, the proposal has been greeted with a collective sense of puzzlement that is raising questions not only about the substance of the plan, but of the seeming hastiness surrounding its rollout.
The few details available about McCain’s American Homeownership Resurgence Plan give the impression the plan is “half-baked,” according to Larry Sabato, director of the University of Virginia’s Center for Politics.
“If you’re launching a major new initiative, usually you blitz the cable networks and really try to penetrate the public consciousness. I didn’t see that today,” he said Wednesday.
“It would really frighten me if he actually thought this was good policy,” said Dan Mitchell, a senior fellow at the libertarian Cato Institute. “I assume that it’s nothing but a desperation ploy,” to show they are doing something “big and bold,” he said.
“It seems hastily put together … given the lack of detail, specificity, and overlap with existing programs,” added a Republican financial services lobbyist.
AMERICAN HOMEOWNERSHIP RESURGENCE PLAN
John McCain will direct his Treasury Secretary to implement an American Homeownership Resurgence Plan (McCain Resurgence Plan) to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis. America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy. It is important that those families who have worked hard enough to finance homeownership not have that dream crushed under the weight of the wrong mortgage. The existing debts are too large compared to the value of housing. For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages. Lenders in these cases must recognize the loss that they’ve already suffered.
The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate mortgages that will keep families in their homes. By purchasing the existing, failing mortgages the McCain resurgence plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.
The McCain resurgence plan would be available to mortgage holders that:
- Live in the home (primary residence only)
- Can prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).
The new mortgage would be an FHA-guaranteed fixed-rate mortgage at terms manageable for the homeowner. The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity” in some homes. Funds provided by Congress in recent financial market stabilization bill can be used for this purpose; indeed by stabilizing mortgages it will likely be possible to avoid some purposes previously assumed needed in that bill.
The plan could be implemented quickly as a result of the authorities provided in the stabilization bill, the recent housing bill, and the U.S. government’s conservatorship of Fannie Mae and Freddie Mac. It may be necessary for Congress to raise the overall borrowing limit.
