The Candidates and the Crisis

Posted by: Chris Palmeri on May 28, 2008

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Barack Obama visited Las Vegas, one of the hardest hit housing markets in the nation, and used it as a backdrop to unveil his fix for the mortgage mess. Obama says he wants to create a $10 billion government-financed fund to help restructure bad mortgage loans as well as offer tax credits good for 10% of their mortgage interest payments to troubled borrowers. He said he supports legislation proposed by Senator Dodd and Congressman Frank that would have the Federal Housing Administration guarantee new loans if lenders agree to forgo part of the principal and lower the interest rates. Obama also said he wants to increase the level of disclosure of loan terms to borrowers, increase penalties for predatory lending and eliminate income taxes for senior citizens making under $50,000 a year.

Taking a page from Ronald Reagan, Obama trotted out Felicitas Rosel and Francisco Cano, a maid and a porter at the Bellagio hotel on the Strip who are now in danger of losing their home of many years. “Because a lender went for the easy buck, they are left struggling with ballooning interest rates and monthly mortgage payments,” Obama said.

Hilary Clinton quickly reiterated her own housing policy, including a moratorium on subprime loan foreclosures and a freeze on subprime adjustable loan rates. She also supports the Dodd/Frank legislation and a $30 billion mortgage bailout fund. She used the occasion to slam President Bush’s housing policies.

Largely absent from the debate has been John McCain. He briefly took a stand in April, saying he would have his own $10 billion mortgage restructuring fund. That was after several months of saying the government shouldn’t prevent market forces from working. His campaign Web site has almost nothing to say regarding a housing program, at least as far as I could find. Strange given that his home state of Arizona is another place struggling with the housing bust.

Reader Comments

ballbuster

May 30, 2008 5:31 AM

Poor Las Vegas. So close to California and so far away from God. The reason for the incredulous number of foreclosure in Las Vegas is the Californian scamers. Droves of Californian real estate scamers went to Las Vegas recreating an artificial unsustainable real estate feeding frenzy just as they had done in Southern California. Spreading the California real estate scam to Las Vegas, the speculators sought to build their house of wealth on shifting, cheap desert sand. But this is Las Vegas, the land of Sodom and Gommorrah where God has warned all, especially its California sinners who dwell within its citywall, to restrain their hunger and thirst for the pleasure of the greenback. They heed not. They repent not. Some turned back seeking double-dipping while hot-and-heavy newbies were seduced. And as it is written, it came to pass that judgment day arrived, and Truth casted away the evil California real estate scamers as well as all those who gave aid,shelter and comfort to them: Countrywide, BearStearn, Merril Lynch, Ambak, MBI, CitiCorp, WashingtonMutual, Wachovia, Credit Suisse, UBS,etc, etc. Surely, the California real estate speculators will have reap its reward: the wages of sin is death because all of them will now slowly bleed to death from their speculation greed. "Save me! Save me!" They now plead eloquently to false prophets for relief but all their hands are dirty and their words are but filthy rags. There is but one soothing consolation for these real estate scamer on death bed: It is a covenant that what shall be done to Las Vegas real estate scamers will be done to Southern California real estate scamers. So it is written.

lf

May 31, 2008 12:15 PM

Frankly, I am surprised that the 3 presidential candidates have not taken more visible positions on the housing crisis. The most recent edition of the Economist points out that the magnitude of recent property price collapse has already been greater than was experienced during the US depression period (1929-32). The US housing crisis represents the largest obstacle in restoring consumer confidence and healthy economic growth.

It is shameful for the current administration to largely ignore the crisis, which has spent billions in Iraq for what now turns out to be a questionable war.

Senator McCain has largely watched the crisis from the sidelines and in light of his prior tainting in the last real estate collapse (remember the Keating Affair in the 80s), one would think that he would be a leader with explicit near term policy recommendations to stabilize house prices.

rick

May 31, 2008 10:25 PM

Maybe McCain is not interested in bailing out banks and speculators. Good for him!

rick

May 31, 2008 10:30 PM

Besides this "crisis" that you are freaking out about is really a "crisis" in about five different states that saw HUGE and UNSUSTAINABLE bubble pricing. All the "aid" for the "crisis" really will be is the responsible people bailing out the irresponsible ones. I can guarantee you Obama or Clinton won't be paying for this out of their own pocket. Rather, it will be a "transfer of money" or "housing welfare" fund.

rick

May 31, 2008 10:42 PM

One last thing. You used Vegas as an example but forgot to mention that was the area with the highest rate of mortgage fraud in the nation. So I ask the question, "Should we as a nation be bailing out mortgage fraud?"

Joe Lee

June 2, 2008 1:40 AM

It is not the federal government responsiliblity to fix the housing problem. McCain, even Obama, should not do anything. Let the housing market correct by itself. The less government involment, the better. Why should tax payers get involve?

tom

June 2, 2008 5:06 PM

What ever happened to people taking responsiblity for a bad business decision.
So your telling me...all mortgage brokers were out to get everyone?

Don't think so.

These buyers went through a process and decided to go the cheap route and are now paying for it.

Rich

June 3, 2008 12:30 PM

McCain is out of touch regarding his day job. When was the last time he cast a vote in the senate? So I am not sure he is even aware that there are a large number of foreclosures in the state of Arizona.

PSP

June 6, 2008 4:33 PM

One simple reason John McCain does not talk about mortgage is that he does not have to pay. He makes enough from politics and don't have to worry about paying mortgage. Tell me why so many people are interested getting in to politics? Get elected at local, state or federal leval.Talk about problems(you get compensated/paid for that too!)

PSP

June 6, 2008 4:34 PM

One simple reason John McCain does not talk about mortgage is that he does not have to pay. He makes enough from politics and don't have to worry about paying mortgage. Tell me why so many people are interested getting in to politics? Get elected at local, state or federal leval.Talk about problems(you get compensated/paid for that too!)

R.Switzer

June 9, 2008 7:34 AM

Maybe, just maybe, McCain does not feel that the state is the answer to every problem. Maybe, just maybe, he agrees with me that the state can only cause problems and cannot possibly solve one without inadvertently causing three new ones.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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