What The New President Faces

Jun 29th, 2008 @ 4:13 PM by Alden Smith

A report by Bloomberg states that 3 million homes now face foreclosure in the U.S.  U.S. lawmakers aren’t expected to complete work on a bill until after the July 4 recess.  This leaves a lot of people in a lurch, but we all know how slowly the wheels of Washington turn.  President Bush has said he will not veto what lawmakers come up with, with a few provisions. The legislation would help some borrowers refinance into more stable 30-year fixed-rate loans backed by the government.  The new legislation would help about 400,000 borrowers if they can hold on until after the recess, that is.

It is evident that the new President will be faced with dealing with the foreclosure issue.  Both have a plan that would be beneficial to homeowners in default.  Obama has a plan to put up $10 billion to help people refinance their mortgages or sell their homes under court protection. I believe his statement earlier this month that “The principle is simple — if the government can bail out investment banks on Wall Street, we can extend a hand to folks who are struggling on Main Street” echoes the feelings of many Americans.  It certainly does mine.  McCain, on the other hand, said in March that “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 has since backpedaled a bit on that position.  And I have to agree with that, also, but take into account the bailout, pure and simple, of Bear Stearns.  It should be tit for tat, and all that, in my humble opinion.  If the government can bail out a company who had questionable loan practices and subsequently failed, then it is no different to me than Mr. Average Joe down there on Main Street.  With, of course, the exception that Joe probably did not do a thing to defraud or deceive, as happened with Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin.  I have to think Joe just wants to keep a roof over his head, not be the next great white hope.  But that is another thing…

No matter what the newly elected President does, he will have a very hard time sorting this out, and I doubt that he will have bipartisan support.  It will be interesting to see what happens during the first 100 days in office of the new President.  I can hardly wait.