Election Issues & The Candidates

Dec 9th, 2007 @ 3:12 PM by Alden Smith

It seems like everything in this country right now is geared around the mortgage crisis.  It’s a good thing it is – we seem to be headed for a recession, and no one wants to see that.  Each week, it feels to me like all I report on is gloom and doom in the mortgage market.  I have to console myself with the fact that it isn’t going away any time soon, and that writing about it helps keep people informed.  And I guess that is why we are here.

The Candidate’s Viewpoint

With an election year coming up, it stands to reason that any candidate must have a very good grip on the current economic situation.  It couldn’t hurt, either, for them to have the absolutely best answer.  We look at the front runners, and their stance:

Hilary Clinton

Clinton proposes a 90-day moratorium for distressed holders of sub-prime mortgages who live in their own homes.  This is also in addition to a five-year freeze on interest rates.

Quoting Senator Clinton: “Some people might say Wall Street only helped to distribute risk – I believe Wall Street shifted risk away from people who knew what was going on onto the people who did not. I am prepared to consider giving legal protection against investor lawsuits to servicers and others who administer these loans and who do the right thing by balancing the interest of homeowners, the investors and our economy.”

Mitt Romney

Romney supports federal assistance to help homeowners that are in trouble refinance their loans.

Quoting Mr. Romney: “I would lose sleep over homeowners who didn’t realize that their rates were going to go through the roof, and I think in those cases, we’ve go to go back and help refinance those loans.”

Rudy Giuliani

Giuliani, always the tough guy, takes the stance that it is not up to taxpayers to bail out people who have used poor judgment in buying homes they could not afford.

Quoting Mr. Giuliani: “If you’re going to get a home and you’re going to get a risky mortgage, you’ve got to pay attention to the word ‘risky’.  And that’s the choice that you make. That’s the choice that the borrower makes, and you can’t expect the rest of the economy to bail you out of situations like that.”

Whoever you decide to vote for, it is my belief that not one of the leading candidates can have the “right” answer.  This current mess is not something that will go away soon, and there is really no right or wrong way to approach it.  A candidate must be very cautious when treading in this area.

There are some political pollsters who believe that the current mortgage crisis is going to be the top issue during the upcoming primaries and subsequent election.  With the current number of voters that are facing foreclosure, and the people who are advocating for them, it would pay to be in the right camp.  And candidates must also consider what Wall Street and major investors have to say about all this.  The money crowd certainly has a big effect on the election process.

May people think that this is a major issue in the upcoming election.  Planning and executing the best policy for addressing this can make or break any candidate.  They had better know what they are doing.

One Response to “Election Issues & The Candidates”

1. lblair says:

   December 10, 2007 at 3:21 pm

   I have mixed feelings about the mortgage crisis – seems we’ve covered much of this over the past few months, but here’s a snapshot of my ambivalence.

   Consumers with escalating ARMs – if the ARM was a means to the end of purchasing a home that one really couldn’t afford without the temporary rate: On the one hand, shame on the consumer.

   Lenders and brokers who disregarded the risk that less than good-credit borrowers represented, who were reminded of that risk as borrowers defaulted: On the other hand, shame on the broker/lender.

   But there are also broader things going on in the US economy that are impacting consumers and their ability to service loans (particularly on inflated mortgages) including the escalating price of fuel and all of its associated cost increases on goods including necessities like food and clothing.

   There’s the secondary impact of the mortgage crisis / crash in the housing market including the lack of new home construction and the related impact on those jobs and in turn on the larger economy.

   I want to hear from a candidate with a broad understanding of macroeconomics who can help us to chart a course through these interconnected problems – on the fly! Have we seen that?

   Add to that the complexities of global trade, our questionable foreign policy…Ugh. Seriously, is there any good news?!