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Hillary's modest proposal (to wreck the housing market)

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(Fortune) -- Hillary Clinton is no dummy. Even her detractors know that. And yet in last night's Democratic presidential debate in Nevada, Clinton floated what is perhaps the dumbest solution to the current mortgage mess I've heard from a top presidential contender.

"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus on Jan. 19. A 90-day moratorium on foreclosures would throw a lifeline to some deserving homeowners, though I suspect it would only delay the inevitable for most. That's not my beef.

Where Clinton goes awry is her proposal to freeze mortgage rates for five years, which is essentially a much broader version of a deal President Bush recently hammered out with lenders to assist some subprime borrowers. If Clinton's only goal were to bail out homeowners facing steep rate resets on adjustable mortgages, her plan would work just fine.

For everyone else though, such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn't impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who'd lost the equity in their homes choose to walk away from their mortgages.

"It certainly would not speed the recovery of the housing market," says Doug Duncan, chief economist of the Mortgage Bankers Association. "The problem now is that investors are already worried about what the risks are, and (a rate freeze) would only widen risk premiums more."

...

... when I discussed Clinton's plan with a more sympathetic economist - one who'd worked for Bill Clinton - his reaction was much like mine and Duncan's. "This is an ugly correction, but it's a necessary one," says Jared Bernstein, senior economist with the liberal-leaning Economic Policy Institute. "This kind of an idea is a little bit of untying your shoes with a buzz-saw."

http://money.cnn.com/2008/01/16/commentary...rtune/index.htm


Man is made by his belief. As he believes, so he is.

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quit loaning money to deadbeats.... look I fixed the subprime lender problem


"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies."

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006



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Stop giving loans to the illegals who come here and try to take our land and a piece of American land and turn it into little Mexico. Thats what started the mess to began with giving loans to illegals lol :jest:


Citizenship

Event Date

Service Center : California Service Center

CIS Office : San Francisco CA

Date Filed : 2008-06-11

NOA Date : 2008-06-18

Bio. Appt. : 2008-07-08

Citizenship Interview

USCIS San Francisco Field Office

Wednesday, September 10,2008

Time 2:35PM

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