Wow! McCain's asking for my vote! Why, the audacity! Bloomberg:
Republican presidential nominee John McCain's plan to stabilize the housing market would rely on government funding already authorized by Congress to buy mortgages directly from distressed homeowners.
The plan wouldn't require approval of lenders, McCain senior policy adviser Douglas Holtz-Eakin said on a conference call today. The direct cost of the plan would be about $300 billion, according to a statement from the campaign sent yesterday.
``The initiative would rely on authorities that have been provided in recent months by the Congress,'' Holtz-Eakin said. ``It could help literally millions of people. We don't have a precise estimate.''
McCain's proposal would use $300 billion in funding for the Federal Housing Administration to insure [??] new fixed-rate loans to distressed homeowners, plus part of the $700 billion financial rescue plan approved last week. It would also use the government's new authority over Fannie Mae and Freddie Mac, the nation's largest mortgage buyers, which were taken over by federal authorities in early September.
Here's where my weakness in finance -- heck, in money -- kicks in. I don't think that McCain's "insurance" proposal is the same as a HOLC-style cramdown that actually purchases the assets or rewrites their terms. But I'm not sure. Readers?
Both homeowners who are already delinquent on their mortgages and those who owe more than their homes are worth would be eligible for the McCain-backed refinancing plan, Holtz- Eakin said.
The plan could be up and running quickly because all the authority required has already been granted in previous congressional actions to stabilize the housing and financial markets, the campaign said. Congress may have to raise the debt limit to make it work.
McCain first disclosed his program, called the American Homeownership Resurgence Plan, last night during his debate with Democrat Barack Obama.
Hilariously, the McCain campaign term credits Hillary Clinton with the idea (hat tip, Inna), though see above on whether the two plans really are the same.
Checking the extremely authoritative Obama website on this, I found (under the confusing title of "McCain plan not new" (the following):
RESCUE PLAN ALREADY INCLUDES AUTHORITY FOR TREASURY TO BUY AND RESTRUCTURE MORTGAGES
Rescue bill includes authority for the Treasury Department to buy “residential or commercial mortgages. ” [Emergency Economic Stabilization Act of 2008, Public Law No: 110-343, 10/3/08]
Which is McCain's point, rightly or wrongly. We don't have to wait. And the bankers didn't have to wait. Why should we have to?
OBAMA CALLED FOR INCLUDING THIS AUTHORITY IN THE RESCUE PLAN
Obama Said “We Should Consider Giving The Government The Authority To Purchase Mortgages Directly Instead Of Simply Purchasing Mortgage-Backed Securities.” Obama said, “For example, we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage- backed securities. In the past, such an approach has allowed taxpayers to profit as the housing market recovered. This is not simply a question of looking out for homeowners; it’s doubtful that the economy as a whole can recover without the restoration of our housing sector, including a rebound in the home values that have suffered dramatically in recent months.” [Press Conference, 9/24/08]
9/24, eh? Hillary's speech on this was 9/18, and she started pushing the idea back in February.
And just when I was about to give credit to Obama for doing the right thing, Obama walked it all back on 10/1. (The quote is from a press release, but Obama said the same thing in his speech on the Senate floor.)
Obama said, “We also must do more than this rescue package does to help homeowners stay in their homes. I will continue to advocate bankruptcy reforms to help families stay in their homes and [1] encourage [2]Treasury to [3] study the [4] option of buying individual mortgages like we did successfully in the 1930s.” [Press Release, 10/1/08]
How many hedges is that, 4? So many hedges he could run a hedge fund!
Come on, Obama! Ask for my vote! McCain did!
NOTE Jeebus, though. Branding it with the surge, in "resurgence"? That's a little odd, isn't it?
UPDATE I encourage readers to study the various HOLC proposals: Hillary, Hillary and Roubini, Hillary in the WSJ, Howell Jackson, and Jonathan G.S. Koppell and William N. Goetzmann. These are all serious proposals by serious people, and deserve far wider circulation in the blogosphere than they have gotten.
The key point is that getting the mortgages working again not only helps homeowners, but banks as well, even with cramdowns, by cleaning up their balance sheets. Also, the money goes to real assets, like houses, and not toxic derivatives purchased by outsourced contractors. So, the banks get helped when the homeowners get helped.
UPDATE Checked around the A list, just for shits and grins, to see if there was any mention of the HOLC issue, even a takedown, which would have been fine (see above on insurance). Nothing, of course. You know, it used to be that I didn't have to rely on the mainstream media for all of my news...
UPDATE Spoke too soon. Atrios frames it as a giveaway to the rich, links to Brad DeLong who says (if I have this right) that McCain leaves out the cramdown part (which is why Atrios's headline, though oblique, is right).
Alrighty then. Why doesn't Obama just advocate Hillary's plan as a riposte? He can take full credit for it, I don't care. Or should we be grateful and hum ble for being fed the weak tea of "[1] encourage [2]Treasury to [3] study the [4] option of buying individual mortgages"?
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Arthur's favorite quote from Bulworth
http://www.imdb.com/title/tt0118798/quotes
"Do you see ANY Democrat doing anything about it? Certainly not me! So what're you gonna do, vote Republican? Come on! Come on, you're not gonna vote Republican!"
Didn't say I was!
But that doesn't mean McCain's not asking for my vote, because he is.
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
I didn't mean to suggest that you were
Just riffing on the "no place to go" meme.
A *huge* step
This is pretty huge coming from a conservative Republican, dontcha think? Obama moves the Dems to the right and McCain moves the GOP to the left--on this and global warming/energy (voting against the Cheney energy bill that Obama voted for) and, when push comes to shove, reckless tax cuts (he earned a ton of consternation for voting against the early Bush tax cuts). I'm under no illusions that McCain will be a great or even decent president, but his election will push the GOP in a net positive direction. Obama's, OTOH, well I don't wanna be construed as stalking so I won't link to posts giddy about stealing elections and doing things with no regard to consequence.
Not the same
McCain plan is bad, bad, bad, bad.
Yep...
However, see UPDATEs (written concurrently with your comment).
And you know? The headline still tells the story: McCain's asking for my vote. I mean, he's a Republican, so of course it will suck.
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
Any non-Obot perspectives?
Just because one Obot links to another Obot does not grant objectivity. Also, it's interesting that so much could be made about the badness of McCain's proposal without many details being made available. It would have been nice for Delong to include the specific details of the McCain proposal (if he, you know, even has them) rather than using a couple of sentences to extrapolate his conclusions. Delong could be dead on, but I'm skeptical to trust 1.) and Obot and 2.) extrapolations from a couple of sentences.*
* If the Oborg hadn't, say, doctored videos and pushed RFK smears I'd be more willing to trust them collectively. That is why I think we should have "regard for consequence." If half the stuff people say is BS, how are we to evaluate what is and is not BS?
gw, to me, that's why provenance was key on the vid
That's how I can assess trust in that context.
I'm not sure there's a generalized way to recognize trustworthiness absent context, though. (For example, I'm disappointed in Krugman going the "fix it later" route, but I can't imagine Krugman faking a video.)
I'm afraid the only way is case by case (after throwing out a set of known offenders it's not worth wasting time on, Larry Johnson, if time is a factor (and when is it not)).
In this case, I understood DeLong to say that the missing piece was the cramdown -- bringing the face value of the mortage into some relation to the real value of the house (OK, OK, not an economist). So, no cramdown, and indeed the taxpayers could be on the hook for all the toxic stuff, which is a very bad plan. Obot or no, if he's right on the missing cramdown, I think he's right on the merits.
This is a very interesting discussion and needs to be continued. (For example, I regard all candidate websites as 100% untrustworthy at all times.)
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
Exactly why regard for consequence is so important, IMO
When Kant was trying to formulate instances of his categorical imperatives, he brought this up. Would have been nice to have a discussion of Kant, rather than, say, calling me a stalker. So it goes.
Well I'll be damned
Obama moves the Dems to the right and McCain moves the GOP to the left...
And that, my friends, is what we call "postpartisanship".
All hail the Superparty!
Unity
ponies for all!
...for the rest of us
...for the rest of us
A shift in the window, not postpartisan anything
At least that is what is significant to me. One shifts the entire political climate one way, the other shifts it the opposite direction.
Insure or Ensure
that is the question in this sentence:
Will McCain's proposal ensure new loans or insure new loans?
It could be a dressed up version of the awful plan floated by House Republicans that involved an insurance scheme for the banks. If that's what it is, then it's, you know, awful. If it tries to repackage that as some sort of insurance scheme for mortgages then it's also awful.
If, however, McCain is now desperate enough to try to get on the HOLC bandwagon, then that would be good. It's not so much that I trust McCain as it is that the more public support for HOLC the better. It puts more pressure on Obama and the Dem "leaders." It makes it more likely HOLC will pass. And, let's face it, after FISA and the Great Giveaway, I don't trust the Dems anymore either.
So far, I don't think we can tell from what's been said exactly what McCain is endorsing. It could be very good or very bad, depending on the details, like which insure/ensure he means.
I think "insure"
because insurance is mentioned below.
Wouldn't it be nice if the Dems came back with a real HOLC, instead of (assuming, here) McCain's fake one? In my dreams...
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
They Need to Let All those Chicago Economists
study HOLC first. You know how much Chicago economists love Keynes, so I'm sure they'll be all for it.
That was mostly snark
But I do see the two parties moving towards convergence - have seen it for as long as I've been interested in such things - and that's what's important to me.
Carry on, then...
...for the rest of us
...for the rest of us
Obama will oppose McCain mortgage plan
via Ben Smith (www.politico.com) at 2:23:
The Obama campaign is coming out against McCain's new plan to buy up Americans' mortgages, my colleague Carrie Budoff Brown reports.
The campaign is citing the burden it would place on taxpayers -- the issue that has made the overall bailout unpopular in the polls.
UPDATE: Here's the statement from the campaign's economic policy director, Jason Furman.
Senator McCain’s first response to this economic crisis was to say that the fundamentals of our economy are strong. Since then, he’s acknowledged that there is a crisis and offered multiple plans, sometimes conflicting. Last night, in his latest attempt to get it right, he threw out a proposal that appeared to give the Treasury authority it already has to re-structure troubled mortgages. But now that he’s finally released the details of his plan, it turns out it’s even more costly and out-of-touch than we ever imagined. John McCain wants the government to massively overpay for mortgages in a plan that would guarantee taxpayers lose money, and put them at risk of losing even more if home values don’t recover. The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud.
Since this beginning of this crisis, Barack Obama has demanded that any rescue plan must protect taxpayers and ensure that they share in any profit once the economy recovers, and he worked to include that principle in the plan that passed Congress. John McCain’s plan to overpay for bad mortgages by handing taxpayer dollars over to big financial institutions is erratic policy-making at its worst, and it’s not the change we need to strengthen our economy, create new jobs, and keep Americans in their homes.
1) That wasn't a very clear statement, was it?
2) Obama wants to "...ensure that (taxpayers) share in any profit once the economy recovers...." Doesn't that mean the banksters get their money first?
3) Obama is opposing a plan that is at least an attempt to help homeowners, without offering anything himself. Shouldn't he be pressured to come up with more for the homeowners too?
oops-
you beat me to it, TP : >
Can't beat something with nothing
As far as I can tell, the details still aren't real clear. I wonder how McCain will "clarify" them?
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
"Obama will oppose McCain mortgage plan" --
-- http://www.politico.com/blogs/bensmith/1... --
"...The Obama campaign is coming out against McCain's new plan to buy up Americans' mortgages, my colleague Carrie Budoff Brown reports.
The campaign is citing the burden it would place on taxpayers -- the issue that has made the overall bailout unpopular in the polls. ..."
in a week, he'll change his mind
--i'd bet on it.
Maybe we can help him do that...
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
is McCain's plan Hillary's or no tho?
that's what's key--along with the fact that Obama is offering nothing, as usual.
Based on what we have now...
... I'd say it is not (based, I grant you, on DeLong pointing out the missing cramdown.
It would be a lot more typically Republican for McCain to steal Hillary's plan, fuck it up to benefit his own buddies, poke a stick on Obama's eye by thanking Hillary (and collecting bonus points for bi-partisanship), and then crank up the populism down the stretch. He won the primaries after being let for dead, after all.
And of course it's typically Obama to use a Republican frame ("the taxpayers", "irresponsible spending") instead of offering a better plan.
[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.
"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi
It probably *is* typical GOP lameness
But I think, if we wanted to, we could probably influence McCain more than Obama at this venture. McCain needs votes and dangling them--however sincere or insincere--may result in some concessions. This could also force Obama's hand as well, but since we have no influence on Obama, getting McCain to force Obama's hand could be all around beneficial. I'm pretty sure the polls are going to tighten, which means undecideds can exert more leverage. That assumes we won't piss away that leverage, though.
well, at least now it makes (at least some) sense.
from Brad DeLong's page:
"The McCain plan is:
-Give a present of $100 billion to the bankers who made the loans.
-Acquire and regularize the mortgages of only two-thirds as many homeowners as could have been accomplished if the $300 billion were invested wisely.
There's a big difference here: 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.
I would say that this is unbelievable, but I do believe it."
Still, That's $200 Billion McCain Is Offering
Based on that analysis, McCain is proposing that $200 billion be spent acquiring and regularizing mortgages. That may be $100 billion less than he could offer to buy if he spent all $300 billion on mortgages, but it's still $500 billion more than the bill that just passed the Democratic Congress.
As for this "Democrats want to prevent depression and support the financial markets by investing taxpayer money in banks with troubled assets"? I've seen no proof that this is what "Democrats" want to do. I've seen some Democrats argue for this, but none of it was in the bill the Democratic leaders flogged last week as having to be done NOW! NOW! NOW! (for that matter, why do we need to do anything when the problem was solved last week? Right?). That was the kind of giveaway Delong was complaining Republicans want to do. I haven't seen any of the Congressional leaders or Obama commit to investing in the banks (which presumably means equity and not just buying the shitty assets, right?). Hell, Obama hasn't even committed to spending $200 billion to buy mortgages. He's only committed to "studying" HOLC.
McCain's plan sucks, but he's apparently put forward a plan with specifics or is going to. Where's Obama's? How many billions is he willing to spend to buy mortgages? How many is he willing to hand over to Wall Street in more giveaways? After last week, I don't trust any of them - Dem or Rep. - on this issue. So don't simply tell me the Democrats want to do better, tell me exactly what they have committed to do and why you believe they will really do it.
Remember, Dems and Obama passed the bill
It would have been DOA if the Dems and/or Obama chose to kill it.
From a What Do I Know About This Stuff reader, WSJ blog writer,
Heidi Moore of Deal Journal, said that McCain's plan was similar to those of Marty Feldstein, et al.
~~~~
I popped over to Krugman's to see what he was saying about McCain's new proposal. Nothing, that I could find. But I asked him to address it.
There was an opinion piece link which sounded like us: Answer the Questions. Would make things so much easier....