Barack Obama: John McCain’s mortgage bailout ‘costly and out of touch’
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On further review, the Barack Obama campaign has chosen to criticize John McCain’s surprising call last night for a new homeowner bailout under which the federal government would buy $300 billion worth of underwater mortgages and issue cheaper, government-backed mortgages in their place.
The Obama campaign’s initial response Tuesday was hardly critical: ‘Bill Burton, a spokesman for the Obama campaign, said the idea was not a new one and noted that the Illinois senator had raised it.’ Today, however, the Obama campaign went on the attack:
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,’ the Obama campaign said in a statement. 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.
If you want to read more about the McCain plan -- and the ‘many mysteries’ it raises, read Mark Lacter’s quick take at LA Biz Observed.
Back story: Here’s the McCain campaign’s description of the plan, which it calls The Homeownership Resurgence Plan. Highlights: To be eligible, borrowers would have to ‘prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).’ The McCain campaign argues the recent bailout bill, plus the Fannie-Freddie takeover, plus last summer’s housing bill give the government the authority to buy mortgages and replace them with cheaper, government-backed mortgages.
Keep reading below for a transcript of the portion of last night’s debate in which McCain first floated the idea.
From the debate transcript posted at Top of the Ticket, here’s the portion relating to McCain’s new mortgage plan:
...I would order the secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes -- at the diminished value of those homes and let people be able to 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, it’s not Sen. Obama’s proposal, it’s not President Bush’s proposal. But I know how to get America working again, restore our economy and take care of working Americans. Thank you
Later, McCain added:
...we’re going to have to go out into the housing market and we’re going to have to buy up these bad loans and we’re going to have to stabilize home values, and that way, Americans, like Alan, can realize the American dream and stay in their home.
Later still, McCain added:
I think if we act effectively, if we stabilize the housing market -- which I believe we can, if we go out and buy up these bad loans, so that people can have a new mortgage at the new value of their home -- I think if we get rid of the cronyism and special interest influence in Washington so we can act more effectively.
--Peter Viles
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Photo Credit: EPA
Hat tip: Tex, via comments.