A Wild August Surprise Coming From Obama? :: Political News and commentaries

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August 5, 2010

A Wild August Surprise Coming From Obama?

In the category of a "please tell me it isn't so," there's a rumor from James Pethokoukis that the increasingly frantic White House is scheming to partially bail out people with underwater mortgages (if this doesn't qualify as a purely political stunt, nothing does):

Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages -- one in five -- are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama's loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:

If you harbor any doubts as to this being nothing more than a political ploy by the White House, Pethokoukis helps clear that up (emphasis added):

What is happening is that the president's approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they -- and their children and their grandchildren -- would be paying for someone else's mortgage woes.

... And don't think the White House is worried about financial market reaction. If they thought it would pass Congress, they would be submitting a $200 billion Stimulus 2.0 (3.0?, 4.0?) right now.

Apparently, the Obama administration believes politics trumps common sense and the future economic survival of the country. Clearly, socialists like Obama think the old fashion way of handling an upside down mortgage is now obsolete.

Looking over at Redstate, I see that Moe Lane has a simple solution to his upside down mortgate that is, and should remain, the way that all Americans should be dealing with their mortgages: He makes his morgage payments:

... we sat down and worked out how much we could afford to spend beforehand, then we stuck to that number like glue. In other words, I don't need a handout to pay my bills, and I really don't need to spend another insanely large sum of money (Hot Air thinks that it could reach 100 billion, which is a large sum of money, even today) that my kids are just going to have to repay later, after the President retires to the global cocktail circuit. And I know that people are going to argue that the majority of Americans can be short-termed bribed in this fashion, but you know something? I don't think it'll work. Particularly when it comes to people who have kids.

As Moe goes on to point out, at some point the Democrats are going to have to accept the fact that you cannot finesse your way out of some situations, and that this is one of those times.

Yes, it is going to be incredibly painful for long-term, still-serving federal politicians who can be linked to the crisis. Yes, thanks to 2006 and 2008 that's going to disproportionately hurt Democrats. Yes, Republican and conservative operatives like myself will (deservedly) mock their pain for it.

Welcome to reality

It's the last point that's far beyond the grasp of the WH - the "reality" factor, and that Obama's political ploys are encumbering Americans for generations to come.

We simply can't afford to have this man as president.

Posted by Richard at August 5, 2010 10:44 AM

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