Wednesday :: Mar 26, 2008


by Turkana

Saint Maverick is ready to solve the mortgage crisis. As reported by McClatchy:

Sen. John McCain, R-Ariz., on Tuesday called for mortgage lenders to help struggling homeowners stay in their homes, but said government's role should be temporary and limited.

McCain, the presumptive Republican presidential nominee, also called for increased transparency and accountability in the mortgage industry, among both lenders and borrowers.

Um. Okay. That will certainly help. Strong, aggressive leadership and all.

"It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," McCain said in a speech in Santa Ana, Calif. "Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy."

Very good. In other words, to those who are or may be losing their homes, Saint Maverick wants you to know that he understands: it's your fault. Sorry. Not society's problem. Unless the entire financial system and the economy are at risk. Of course, as Time Magazine reported, last month:

A number of economists and banking industry experts believe the subprime crisis could metamorphose into the biggest debacle to hit the sector since the savings and loan catastrophe of the 1980s, which caused some $500 billion in losses to the banking industry. And that means the future of a couple of name-brand financial institutions could be in jeopardy.

Much will depend on how far home prices tumble over the next few quarters, how high unemployment climbs, how many homeowners are pushed into foreclosure from rate resets, and, most importantly, how far the crisis spills into the conventional mortgage market and other parts of the credit sector. "The impact here could be far larger [than the S&L crisis] in terms of the dollar amount and the spillover effects into other parts of the economy, particularly the consumer," said Merrill Lynch economist Kathy Bostjancic.

Okay, so maybe the entire financial system and the economy are at risk, but there's no point in doing anything about it. I mean, it's much easier to blame those who are or may be about to lose their homes. And greater transparency will solve everything. Just watch!

McCain does deserve credit for consistency. Keep in mind that in the January South Carolina debate he downplayed the seriousness of the housing crisis.

“I don’t believe we’re headed into a recession,” he said, “I believe the fundamentals of this economy are strong and I believe they will remain strong. This is a rough patch, but I think America’s greatness lies ahead of us.”

The guy talks in bland platitudes. When he admits that he doesn't understand economics, he really means it. But he does, at least, give good sound bite. And he promises to give economic proposals fair readings. From the McClatchy article:

McCain said that the Federal Reserve's bailout of Bear Stearns met his criteria. But he offered no specific federal proposals to aid homeowners facing foreclosure. He promised to evaluate proposals "based on their costs and benefits," but he didn't address any of the solutions percolating on Capitol Hill.

Now, that's leadership! Bail out the banks, but not the people. Don't offer any solutions, but evaluate those offered by others. And maybe do something about it all if it becomes a serious crisis. Which everyone else- everyone who does understand economics- understands that it already is.

In soft-pedaling direct federal assistance to homeowners, McCain drew a sharp contrast with both his Democratic rivals. Sen. Hillary Clinton, D-N.Y., on Monday proposed a $30 billion federal fund to help local communities aid pressed homeowners. Sen. Barack Obama, D-Ill., proposed a similar $10 billion fund. In that sense, McCain's speech was as much a statement of political principle as it was a substantive response to the housing crisis.

The principle of proving that you're serious when you say you don't understand? The principle of not offering solutions while others do?

Turkana :: 11:30 AM :: Comments (26) :: Digg It!