Thursday, October 09, 2008

McCain Rescue Plan Face Value to Lenders

McCain's plan buys out the mortgages at FACE VALUE from the lenders, according to Keith Olbermann.

TO: Interested Parties

FR: Jason Furman, Obama-Biden Economic Policy Director

RE: The Facts on McCain’s Plan to Reward Lenders at Taxpayer Expense

DA: 10/9/08

In light of the McCain campaign’s latest erratic move on the economy, see below for details on Senator McCain’s plan to reward irresponsible mortgage lenders at taxpayer expense. In the course of twelve hours, McCain transformed a “new” mortgage plan which was simply restating a policy the government had already authorized into what is possibly the largest taxpayer funded handout to irresponsible lenders in U.S. history. In short, this plan guarantees taxpayers lose money, rewards bad behavior in the past and discourages responsible behavior in the future.

The Note: 'A Simple Mistake?'
McCain Changes Mortgage Plan, Gives Obama New Opening
Oct. 9, 2008
John McCain was hoping that the mortgage buy-up plan that he offered during Tuesday's debate could help separate him from President Bush while also differentiating himself from Barack Obama. It now appears, however, that he may have given the Obama campaign a new opening.

Politico's Mike Allen reports that from Tuesday to Wednesday McCain changed his mortgage buy-up plan, making it "more generous to financial institutions and more costly for taxpayers."

The McCain campaign told reporters in a Tuesday issue paper that lenders "must recognize the loss that they've already suffered."

But when McCain posted the plan to his campaign website on Wednesday, that sentence was missing.

John McCain's $300 billion mortgage plan draws mixed reviews

11:05 AM CDT on Thursday, October 9, 2008
By DAVE MICHAELS / The Dallas Morning News

WASHINGTON – Only six months ago, John McCain advocated "temporary" help for homeowners facing foreclosure while preaching against a "bailout" of irresponsible parties – "whether they are big banks or small borrowers."

On Wednesday, he pitched his new $300 billion plan for the government to buy distressed mortgages from banks without making them take a discount on the sale. The loans would be reduced, at taxpayer expense, so borrowers could afford to keep their homes.

The plan reverses Mr. McCain's long-held aversion to bailouts, yet reflects a rising consensus that only the federal government's deep pockets can save both banks and homeowners. Some critics conceded the plan might work even as they criticized it as welfare for banks that made bad loans.

"One of the pluses of Senator McCain's plan is he's saying we need to make this happen, the government needs to play a proactive role in buying these loans," said John Taylor, president of the National Community Reinvestment Coalition.

Yet Mr. McCain would have banks selling the endangered mortgages at face value.

"It's a total bailout," Mr. Taylor said.

McCain’s Disastrous Mortgage Bailout Pulverized Around Nation
October 9, 2008 | latest-news

Tuesday night, McCain needed a game changer and he proposed a mortgage bailout, but when the details came out on Wednesday, America learned that his new plan rewards irresponsible lenders and uses tax payer dollars to do it. We think economist J Bradford DeLong put it best in the New York Daily News when he said, “Out of the blue, McCain has just proposed a large, no-strings-attached gift of taxpayer cash to bank executives who failed at their business of risk management, and to bank shareholders who failed at their business of hiring executives. That’s simply corrupt.”

In case you missed it, here are additional reports from local and national publications, commentators and economists from Heritage, Cato, Brookings and universities across the country…

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