John McCain Is Proposing A New "HOME Plan" To Provide Robust, Timely And Targeted Help To Those Hurt By The Housing Crisis. Under his HOME Plan, every deserving American family or homeowner will be afforded the opportunity to trade a burdensome mortgage for a manageable loan that reflects their home's market value.
Eligibility: Holders of a non-conventional mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30-year fixed-rate mortgage on the existing home.
How It Works: An individual picks up a form at any Post Office and apply for a HOME loan. The FHA HOME Office certifies that the individual is qualified and contacts the individual's mortgage servicer. The mortgage servicer writes down and retires the existing loan, which is replaced by an FHA guaranteed HOME loan from a lender.
John McCain Calls For The Immediate Formation Of A Justice Department Mortgage Abuse Task Force. The Task Force will aggressively investigate potential criminal wrongdoing in the mortgage industry and bring to justice any who violated the law. The DOJ Task Force will offer assistance to State Attorneys General who are investigating abusive lending practices.
Keeping The Credit Crunch From Hurting College Students:
John McCain Is Proposing A Student Loan Continuity Plan. Students face the possibility that the credit crunch will disrupt loans for the fall semester. John McCain calls on the federal government and the 50 governors to anticipate loan problems and expand the lender-of-last resort capabilities for each state's guarantee agency.
I'm not going to bother with a detailed critique of this, since McCain admits knowing nothing about economics and Phil Gramm, his erstwhile and probably current economic adviser, helped lobby for the bank UBS up to the end of last year, among many many other [censored] things he's done in his life. Ergo, if you want to know why you shouldn't support McCain's "approach" to the mortgage crisis (which started with "deserving" banks and people should get relief - as seen above in and in the history of welfare legislation going back to 17th century britain, go to read this. Honestly, though, if you're considering voting for McCain and you're in debt, I'd strongly urge you to reconsider.
Obama's website calls for minimal bankruptcy law reform, which imo doesn't go nearly far enough either for the interests of the economy or especially ordinary people in addressing the magnitude of the problem in the world:
Address Predatory Credit Card Practices
Obama will establish a five-star rating system so that every consumer knows the risk involved in every credit card. He also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.
* Create a Credit Card Rating System to Improve Disclosure: Obama will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card's features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.
* Establish a Credit Card Bill of Rights to Protect Consumers: Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:
o Ban Unilateral Changes
o Apply Interest Rate Increases Only to Future Debt
o Prohibit Interest on Fees
o Prohibit "Universal Defaults"
o Require Prompt and Fair Crediting of Cardholder Payments
Reform Bankruptcy Laws
Obama will reform our bankruptcy laws to protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.
* Cap Outlandish Interest Rates on Payday Loans and Improve Disclosure: Obama supports extending a 36 percent interest cap to all Americans. Obama will require lenders to provide clear and simplified information about loan fees, payments and penalties, which is why he'll require lenders to provide this information during the application process.
* Encourage Responsible Lending Institutions to Make Small Consumer Loans: Obama will encourage banks, credit unions and Community Development Financial Institutions to provide affordable short-term and small-dollar loans and to drive unscrupulous lenders out of business.
* Reform Bankruptcy Laws to Protect Families Facing a Medical Crisis: Obama will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet.
I honestly don't know his whole policy and the predatory lending part seems decent, but mainly it seems like hemming around the edges of the problem, given how many people it affects, how large it is, and how politically popular a solution would be. See here also:
OBAMA: Well, it is a huge disaster. We've got 7,000 foreclosures a day. And so much of this could have been prevented if we had had stronger oversight on the subprime lending market, if we had implemented some simple reforms around Fannie Mae and Freddie Mac, if we had had some serious efforts to curb predatory lending, a lot of these problems that we've seen could have been prevented. Not all, but a lot of them.
And so now, moving forward, I was glad to hear the president today say that he has embraced the housing bill that's coming out of the Senate and the House. I think it is very important for us to get the ball rolling in stabilizing homeowners right now who can pay a mortgage but may have gotten in over their heads in terms of either the rates or because housing values have gone down precipitously.
We need to get that bill passed. I think some of the ideas that were offered with respect to Fannie Mae and Freddie Mac are good ones. I just want to make sure that we're not bailing out shareholders and CEOs, but that we're focused on maintaining liquidity in the housing market.
If we do those things, then at least we can get a floor and banks can start making -- and lenders can start making some serious adjustments, writing down bad debt.
What we need is some clarity in the market so that people are not punishing sound borrowers, are not under-evaluating assets. You know, if we can just get back to where people have confidence that they know what's out there, what bad debt is there and can identify sound borrowers, then we can get credit flowing again. And that obviously will provide a big boost to the economy. (Boldface added)
Although Obama's going to do a far better job than McCain, particularly in responding to events after he gets into office, for the economy, a lot of the little people are still going to get screwed, as far as I can tell.
36% maximum interest rates??! And that's for Americans!!! Can you imagine what's going to happen to others?!
Perhaps this minimal approach is because the American government is so far in debt that it simply can't afford to bail out its citizens (let alone those of other countries) - but if this were already the case, I think we would see bigger problems than we do at the moment. As a wise friend remarked to me once - they always say they don't have the money - but really it's the priorities.
My suggestion is this: What needs to happen is a broad and rational discussion of exactly whose debts are going to be paid and how. This kind of coordination, though it will immediately be labeled by crazy people as "socialist" in the United States, is probably the only way to prevent a massive global financial crisis. The current method - waiting until a bank goes belly up and then bailing it out and group discusson restricted to the people who control the money (like the federal reserve) - doesn't address the systemic problem that's going to exist as long as American consumers are the consumers of last resort and they're in debt and their wages are not going up very quickly.
More importantly for progressives, without a broad international plan to address this issue - in all its dimensions-- it's going to happen de facto and largely silently as it is now - which means that the people who can raise their voices loudest (i.e. the wealthy, etc.) will be the ones who get bailed out, and the people who are most disempowered (e.g. residents of subSaharan african countries or low-income mortgage holders in the United States) are going to be screwed. This is particularly important now, since the election is the best time to actually gain some leverage on the politicians and banks
If the situation wasn't dire, then it probably could have been avoided earlier through increased labor organizing and other means of pushing up wages (as well as going after predatory lenders - i.e. all of them). But there's not really that much time left from what I can figure out given circumstantial evidence - that enormous companies have already started going bankrupt and that it's already become a major political issue in the U.S. and been widely reported in the media for over a year. But clearly there's some time, or else these politicians wouldn't need to be pushed on this.
So anyone got any other suggestions? Heard about something better? Know of an organization or group working on this? |
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