In Debate, McCain Touted Mortgage Plan Already Proposed By Obama

It was the first question of the evening: how to turn the economy around and help those ensnared in the housing crisis. And in John McCain's first answer, he bragged about a bold new proposal he would implement as president -- that Obama already fought for in the recently passed bailout bill.

"You know that home values have, retirees, continues to decline," McCain started, somewhat unsteadily. "And people are no longer able to afford their mortgage payments. As president of the United States, Allen, I would order the Secretary of Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes at the diminished values of those homes and let people make those -- be able to make those payments and stay in their homes. Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America we're never going to start turning around and creating jobs and fixing our economy. and we've got to give some trust and confidence back to America. I know how to do that, my friends. And it's my proposal, not Senator Obama's proposal or President Bush's proposal."

It took awhile (by rapid response standards), but by the end of the debate, Obama campaign was all over the claim.

National press secretary Bill Burton noted that the "rescue bill includes authority for the Treasury Department to buy 'residential or commercial mortgages.'" Moreover, he noted, Obama has made that proposal twice previously.

At a Sept. 23 press conference, 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."

And in an Oct. 1 statement, Obama repeated the idea. "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 encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s," he said.

Meanwhile on Fox News, conservative pundit Bill Kristol wasn't too impressed with McCain's jumping on the mortgage buying bandwagon.

"We will hear much more about this $300 billion mortgage plan of the next day or two," Kristol said. "It might end up hurting McCain. It is a pretty chaotic campaign. If you were going to do this, you [would need] lay the groundwork for it."

Comments

[dhertzfe]

If your opponent thought of it first ... Go ahead and take credit for it. America is too $tupid to know any better. WRONG!!!!

[Blah Blah Blah]

8:07 CT: "We need to stabilize home values," says John McCain. That is excellent, how do we do this Mr. McCain? "I know how we can fix this economy," John rhetorically responds, but never actually tells us how he will do it.

The Second Presidential Debate: Live Analysis
http://voteforamerica.net/editorials/Comments.aspx?ArticleId=93&ArticleName=The+Second+Debate%3a+Live+Analysis

[ssezer62]

by cutting spending across the line!

[redsongia]

I noticed that. You can tell it's not his plan, because it's the opposite of a spending freeze.

[Laurie66]

I absolutely agree with JT77. An incentive to devalue your home would be an absolute disaster. People who struggle to pay their mortgages should not be rewarded with a collapse in home values. Change payments, not principal. I have never heard Obama talk about a writedown of principal.

[betabeta]

Of all the things he could steal from Obama I was shocked that he would steal that particular one as the Republican Pundits have been so against it..... I guess that is what he means by being a Maverick. But my gosh, if you are going to go against your party by stealing the other parties ideas at least steal one of their better ones... LOL

[CharlesJ]

I have heard Obama say this a good dozen times in his rallies. He pushed to have this in the rescue bill, he pushed it on the first bail out bill. This is not a new plan, this is the Plan that Obama has been pushing for some time. Sorry McCain you dont win on original ideas, and you dont win by trying to take credit for what Obama has stated for days already.

[redsongia]

So now, since McCain agrees, he'll get behind this 100 percent in the Senate, right?

[JT77]

I disagree with that McCain's plan and Obama's plan for mortgages are similar. In fact, they differ in one very critical aspect.

The McCain plan is a sure fire way to tank the economy even faster. Banks are already struggling with defaults. McCain’s plan would cause a nationwide downward reset in ALL home values, putting more pressure on RMBS’s (residential mortgage backed securities) and tranched CDO’s (collateralized debt obligations). Credit would get even tighter than it already is with banks having to write down all the mortgage devaluations. It would also turn a lot more homeowners upside down in their mortgage and may lead to more defaults. This proposal makes McCain's rashness and complete misunderstanding of the economy glaringly obvious.

A better plan would be to refinance existing mortgages at a reasonable fixed interest rate, WITHOUT A PRINCIPAL WRITE DOWN. Home values need to be propped up, not torn down. I believe this is more in keeping with what Obama and Clinton have both proposed.

[cordyc]

This July the "hope now" Act passed Congress. California and Illinois yesterday got Countrywide (one of the biggest subprime writers) to agree to workout many of these loans at 80% of current value with fixed payments. It is better to do it now because this means the "bank" does not end up owning the real estate. The Rescue Act will buy mortgages, it has not been implemented yet but I bet down the road many of these loans are "worked out". It is better to keep a paying homeowner in the house than have the note holder take title to the property.

Look back at the S&L crisis and the Resoultion Trust Corporation to see how it was done. You know, the last financial scandal that McCain had a front row seat at.

[papp1chu]

this idea is not original but it will cost McCain a lot of his base voters. I want to see the respond to this from Republicans and how fast McCain is going to hit the breaks and bail out on this idea saying that it was taken out of contest.

[gopSTEALSyourTAXmoney]

Not only did JC have a front row seat,
he drove the limousine owned by Charles Keating.