Congressional aides say the Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures.
These aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of as much as seven years and industry arguments that the freeze should only last one to two years.
Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.
The administration said that President Bush will speak on the agreement at the White House on Thursday and the Treasury Department announced that Treasury Secretrary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson would hold a joint news conference Thursday afternoon with officials of the mortgage industry.
Behold the bipartisan politics of entitlement.
My syndicated column this week blasts both Hillary and GOP supporters of increased meddling in the housing market to “cure” the subprime mess. As usual, the “cure” is always worse than the disease. A snippet:
If you thought Hillary Clinton’s government takeover plan for health care was bad, wait ’til you see what she has in store for the housing sector. As always with the Clintons, the market is the problem and Big Nanny is the solution. Unfortunately for taxpayers, Hillary has bipartisan company in the Bush administration on this issue. Their election season prescription? Rewarding bad behavior. Punishing responsible behavior. Doing more harm than good.
In case you’ve been living in a cave, there’s a painful credit crunch underway. The culprit is the subprime mortgage — a species of risky home loans to buyers with dubious credit and income. Cash-rich lenders doled out the subprimes hoping rising home prices would compensate for any failed bets. But when housing prices started plummeting and interest rates began rising, many borrowers started defaulting. Insolvency looms for countless lenders.
Instead of letting lenders and subprime mortgage-holders suffer the consequences of their actions, politicians and grievance-mongers are riding to the supposed rescue. In a supreme irony, the very same champions of the needy in the Democrat Party who complain constantly about the lack of “affordable housing” are now fighting tooth and nail to keep housing prices high…
… Let’s boil this down to fundamentals: Why should the rest of us have to shoulder the burden because some buyers made poor choices, overextended themselves and bought more house than they could afford? Why should other business owners bear the costs of lenders’ failed bets? And why are falling home prices such a catastrophe to be “fixed” in the first place?
… Fiscal conservatives ought to be balking at Hillarycare for housing. But President Bush’s treasury secretary, Hank Paulson, is singing a similar tune. He proposed a new safety net to stem the tide of home foreclosures through a bailout plan for homeowners with bad credit scores. They’d be eligible for relief from paying hundreds of dollars in additional monthly payments when their mortgage rates reset. Those who have been responsible enough to maintain good credit, however, will be out of luck. In addition, Federal Reserve Chairman Ben Bernanke has proposed that government-sponsored mortgage enterprises Fannie Mae and Freddie Mac be allowed to raise their loan limits and have their debt explicitly guaranteed by the public dole.
Lawmakers on both sides of the aisle are colluding to protect the reckless and keep home prices high on the backs of prudent taxpayers. Who’ll bail us out from this perversion of the American Dream?
Rich Toscano has more on the “United States of Bailouts.”
We know where Hillary and the Dems stand. How about the GOP presidential candidates?
Civil rights leaders including Jesse Jackson, founder of the Rainbow PUSH coalition, plan to hold rallies in New York City’s Wall Street district and at least six other cities to call for a corporate response to the “crisis” of surging home foreclosures.
As many as 2 million homes are at risk of foreclosure, Jackson said in a statement. The rallies will be held Dec. 10, and also sponsored by the National Association for the Advancement of Colored People and National Urban League. Other rallies will be held in Atlanta, Los Angeles, Detroit, New Orleans, Washington and Chicago.
Jackson’s plans show how the increase in delinquencies on subprime mortgages, some of which were the product of what Federal Reserve officials said were “lax” lending practices, is capturing political attention.
Like I said, they’re damned if they lend, damned if they don’t.