Funny thing about guys running for President. Rather than introduce new ideas when Congress is in session (and debating a major bailout), they save it for a Presidential debate, when they’ve got 90 seconds to make a point. Witness: John McCain’s just-announced plan to spend $300 billion on underwater mortgages. Where’d that come from? NRO’s Stephen Spruiell explans:
Yeah… didn’t Congress just enact major legislation to address this problem? The Housing and Economic Recovery Act of 2008 created a federal mortgage-insurance program for lenders who agree to reduce mortgage payments for struggling borrowers.
How is McCain’s plan different? I’ll try to explain. Let’s say you have a $200,000 adjustable-rate mortgage. Your home’s value has declined, your interest rate has gone up and you can no longer afford to make the payments. Under current law, the government will guarantee your mortgage if your lender agrees to work out a deal with you.
Under McCain’s plan, the Treasury Secretary would buy your mortgage from whoever owns it and then deal with you directly. In many cases, the Treasury Department would already own your mortgage, because it is about to buy up $700 billion worth of mortgage-backed securities. But under McCain’s plan, Treasury would also become your loan servicer.
Awesome. At leaast we’ll know where all those ex-Countrywide employees will find their next job.
Meanwhile, NYT says the idea was actually borrrowed from Hillary Clinton:
The mortgage renewal idea actually originated with Senator Hillary Rodham Clinton, said Charlie Black, a senior adviser to Mr. McCain. And Mrs. Clinton, who proposed the idea in a recent newspaper column, borrowed it from a Depression-era New Deal agency, the Home Owner’s Loan Corporation.
The HOLC continued on until 1951, and politicians should be happy about this… Evidently it even made a profit for the taxpayers. That sounds familiar.