Scope/Impact:
McCain’s approach is to “do nothing” and allow the housing market to correct itself without government interference or rescue. He softened this somewhat in March, saying that he would give some relief to deserving ARM holders.
Main proposal(s):
Allow a free market to correct itself with no government interference or regulation
Theory:
McCain has an essentially hands-off approach to the current housing/foreclosure crisis. He considers it a market problem that needs to correct itself without government interference or regulation. In at least one speech, in fact, he intimated that homeowners have only themselves to blame. He has softened this recently, saying that while he doesn’t believe in government intervention, he would provide some relief to “deserving” ARM homeowners – the specifics of this relief remain unclear. While he doesn’t believe in regulation, he agrees that greater transparency/accountability is needed.
Other aspects of plan as outlined on McCain's website and in speeches:
- Backs Bush administration’s anti-foreclosure initiatives (Five-year, interest rate freeze on some types of sub-prime mortgages and voluntary agreement from six of the largest lenders to suspend foreclosures for 30 days so that homeowners can negotiate better loan terms).
- Suspend tax on mortgage-debt forgiveness
- Backs expansion of Federal Housing Administration (FHA) to help at-risk homeowners convert their sub-prime loans to conventional mortgages. He does not, however, support a reduction in down-payment requirements under the FHA.
- Supports bail out of Bears Stern because the move prevents “systematic financial problems.” In contrast, he does not support bailing out homeowners because they have only themselves to blame.
- Supports reforms that would improve transparency and accountability in the capital markets
Sources:
- Presidential campaign issues: foreclosure by Sabrina Eaton / Cleveland.com (2/24/08) (Suspension of tax penalties, expansion of FHA, supports Bush administration anti-foreclosure initiatives)
- Hey, John McCain: Where’s the Plan to Save Our Homes? by Margaret Priebe / AFL-CIO Now Blog (2/26/08) (Considers McCain approach a “do-nothing” policy)
- Analysis: McCain strikes friendlier tone in Ohio on foreclosure help by Mark Naymik / Cleveland.com (3/27/08) (Cites earlier speech in which McCain intimated homeowners facing foreclosure have only themselves to blame)
- Candidates' housing plans fall short by Lisa Lerer / Yahoo! News (4/3/08) (Supports programs helping “deserving” ARM homeowners, greater transparency and bail out of Bear Stearns)
