James Pethokoukis

Politics and policy from inside Washington

Obama’s August (Housing) Surprise, Part 2

August 5, 2010

The Treasury Department has officially denied it is planning the mother of all mortgage bailouts. And I have no reason to doubt Team Geithner. But of course that assumes that the whole idea was not being cooked up by the White House political team (Rahm and Ax) and not the good folks at Treasury. During the financial reform debate, banking lobbyists continually complained that Geither and Summers had been usurped by R&A in policymaking. And I have gotten zero pushback from the WH. Food for thought. More to come.

But here are some of the reactions to my piece:

1. A New $800 Billion Stimulus Through Fannie and Freddie? (Dan Indiviglio of The Atlantic)

2. Is Obama about to forgive billions in  mortgage principal? (Ed Morrissey of Hot Air)

3. An August Surprise from Obama (The Daily Caller)

4.  Help coming for homeowners (Kevin Drum of Mother Jones)

5. An August Surprise from Obama? (Glenn Reynolds at Instapundit)

6. White House to bail out underwater mortgages? (Moe Lane at Red State)

Comments

Obummer is at again! He is going to be VERY lonely in the White House with GOP controlled house and senate

Posted by STORYBURNhere | Report as abusive
 

What Obama can do is sharply limited by how far in debt the U. S. Treasury currently is, so i don’t expect any new initiatives. There are two reasons why the U. S. economy is comparatively dead.

1) Chasing Illegal immigrants out of the country has created a lack of entry level home buyers which prevents everyone else from upgrading their home and makes for maybe as much as a million surplus homes. When home values were growing regularly people felt more secure in spending. Part of past housing growing demand has been illegal immigrants. Only a small fraction are migrant farm workers.

2) The people who spend the least percentage of income on goods and services are the very wealthy, yet they collectively hold the highest percentage of dollar wealth of all Americans. The record high disproportion assures less economic growth simply for insufficient purchasing. The Gross Domestic Product depends entirely on purchasing–everything else is dependent on that. Factories don’t get built unless required by purchasing demand.

Posted by SeniorMoment | Report as abusive
 

I would’ve thought the existing relief fiasco might have taught him a lesson.
Sorry, silly me – he’s a politician. Sorry. I forgot…

http://nbyslog.blogspot.com/2010/08/gove rnment-economic-intervention-does.html

Posted by nbywardslog | Report as abusive
 

Here’s how to use unspent stimulus money in a way that would fairly, effectively and efficiently use the housing sector to begin to rebuild household wealth and, therefore, affect consumer psychology and real-economy consumer spending:

A Surfer’s Solution: How to inject financial liquidity at the consumer level through the housing market:

http://www.associatedcontent.com/article  /1500395/a_surfers_solution_how_to_inje ct_financial.html?cat=9

Posted by hal1212 | Report as abusive
 

The negative equity issue is not new, the people that haven’t already walked away, likely won’t.

The employment picture isn’t pretty, but experience tells me, if you’ve managed to keep your job up to this point, you likely will continue to be employed.

So, if people are no longer losing their jobs and continuing to pay their mortgage, even if on paper, they have negative equity……….

1) Who is this going to help!?

2) What about all the people that didn’t tough it out to this point, for whatever reason – their house is already gone, what do they get!?

3) A substantial % percent of Americans have only a slight amount of negative equity, (not worth negotiating or walking away from), real equity (anyone that has been in their current house 10+ years) or no mortgage at all. These people will all be penalized for doing things right!

I put 40% down and paid my house off in 12 years, I bought a house I could afford. I didn’t buy a house based on how much $$$$ the bank would loan me.

Posted by Ed753 | Report as abusive
 

This is my own personal response to the idea of an August Housing Surprise. In a nutshell, I think it’s a terrible idea.

http://youngconservative27.blogspot.com/ 2010/08/throwing-more-money-at-mortgage- problem.html

I used to have a friend who would always ask me for a couple of bucks so she could get something to eat, and she would always promise to pay me back. I always told her that it wasn’t necessary, since it was just a couple of bucks. Over time, though, it started to add up. One day, we learned that a hurricane was coming, and she needed some “real money” so she and her friend could leave town until it all blew over, so to speak. I gave her forty bucks, but I told her this wasn’t like the other times, and that until she paid back the forty bucks, I wouldn’t give her any more money, no matter how little. She never paid back the forty bucks, and I never gave her any more.

Governments have a very specific responsibility with taxpayer money to spend it responsibly and not waste it. With welfare, President Clinton worked with Congress to ensure that people on welfare would someday return to the workforce, which would benefit all of us in the long run. That’s an example of responsible stewardship of taxpayer money. The TARP program is supposed to be another, although it still hasn’t been repaid and the government has accepted stock in smaller banks and lenders in lieu of repayment.

As far as mortgage “bailouts”, that’s simply complete irresponsibility. I would never have been able to “make” my friend repay the forty bucks; all I could do was what I said, to never give her anything else. The government, on the other hand, continues to give and give (our money) to people who will never be made to repay.

Posted by StephenMonteith | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •