Economists have railed against John McCain’s proposal to spend $300 billion on underwater mortgages, but the proposal is one of the few bailout ideas at all popular with the public. It’s pretty easy to guess what most people are thinking: Money going to homeowners=good, money going to Wall Street=bad.
It sound like homeowners will soon get some attention from John Paulson:
Bloomberg: ‘There still are a disturbing number of foreclosures where people are walking away from their mortgages,” Paulson told PBS television’s Charlie Rose in an interview in New York that will be broadcast tonight. (Ed note: last night) “There is clearly more that can be done – – needs to be done.”
Lawmakers are pushing the Bush administration to offer more direct help to homeowners, after the first stage of the bailout program focused on buying stakes in banks. While some housing figures showed signs of stabilisation in the middle of the year, the freeze in credit markets threatens to deepen the industry’s slump, throwing more Americans out of their homes.
Paulson said he spoke yesterday with Federal Deposit Insurance Corp. Chairman Sheila Bair, whom House Financial Services Committee Chairman Barney Frank has proposed to lead a “government-wide effort” to stem foreclosures. He talked today with Federal Reserve Chairman Ben S. Bernanke, who said Oct. 7 even households with “good credit” are finding it tough to get mortgages.
“We need to do everything we can to minimize” the millions of likely additional foreclosures, Paulson said today.
What path Paulson goes down is unclear, and this doesn’t necessarily suggest he buys into the program the way McCain (and Hillary Clinton) have envisioned it. Still we wonder, with all this cash going to recaps, and more presumably earmarked to help out homeowners, how much will be left for the trash removal part of the plan. That part seems to be getting smaller all the time.