The Republican and Democratic conventions are almost upon us, and the housing crisis has finally been inserted into the presidential election.
Maybe the President and his Republican rival see homeowners as nothing more than another campaign issue to be exploited, or maybe they are finally starting to understand how central the need to tackle the foreclosure problem is to the American public.
Some days it is hard to tell. But at least the narrative is starting to move forward. It is a start, if a meager one at best.
The housing market is indestructibly woven into the economy. The whole narrative is actually very simple.
Housing has led the economy out of every recession since the Great Depression.
A refi boom inevitably takes hold as interest rates drop and folks refinance their mortgages for lower interest rates.
The extra money from the lowering of your monthly mortgage payments goes right back into the economy, whether its buying new tires, taking the family out for dinner or going to the shore for the weekend.
Those activities stimulate the economy from the ground up. That unfortunately didn’t happen this time because there wasn’t enough equity in our homes and thus the banks refused to refinance your loan.
But of course you and I have known this for a long time now, long before those in power were paying attention.
A year ago I told you underwater mortgages were the “900 lb. gorilla in the room” that could derail President Obama’s re-election campaign.
And in the nearly 12 months since I said made that statement, has anything really changed?
Apparently not, because The New York Times is again examining the President’s early housing policies, and how they say he failed to take decisive action in the early days of his presidency.
And they are right. Obama had a laissez-faire attitude towards housing back then.
He surrounded himself with Wall Street cronies like Tim Geithner and Lawrence Summers, who seemed to convince the President that the banks could clean up their own mess.
And we all know how well that turned out.
Obama put too much trust in Wall Street, and coddled the banks through his first few years in office. He could have reinstated a new version of the Home Owners’ Loan Corporation, which bought and refinanced about 20 percent of outstanding mortgages back in the 1930’s, as many folks proposed including me and even John McCain.
Changing the bankruptcy laws so that individuals could have the same rights as corporations was another option that Obama supported both as a senator and as Presidential candidate, but subsequently was told by his advisors that such a cramdown would be bad for the banks and Wall Street.
It wasn’t until 2010 that we saw a change in direction, but the President’s new get-tough attitude hasn’t paid dividends yet.
We have the mortgage settlement, but it has not changed much, and HAMP has yet to move the meter.
Can you imagine what would have happened had the President laid the hammer down from Day One?
If the President has any saving grace, it is that the Romney/Ryan ticket just might be worse.
Not because they have a bad housing policy, but because they have NO housing policy.
Back when the GOP nominees were in Florida for the primary, I tried to get to the bottom of their plans to address foreclosure.
Back then I found little substance, if I found that much. Now Mitt Romney is throwing a few bones out, saying he wants Fannie and Freddie to sell thousands of properties in their possession.
All that would do is make these entities even more insolvent. It wouldn’t do much to help homeowners or the market.
Listening to Mitt talk, I don’t think he has a vision beyond a few basic talking points.
If you watch his recent interview with a Nevada television station, his answer to a follow-up question is merely to repeat the same talking points that he used to answer the previous question.
Other than blaming the President, I’ve haven’t seen Paul Ryan offer any real theories either.
But this much is clear, the ‘900 lb. gorilla’ is still very much in the room.