With the presidential race entering its final stretch and with the employment figures remaining effectively flat, one would think that the housing crisis would have already been front and center by now.
As I have said numerous times every economic recovery since the Depression has been led by the housing sector.
But only now do we have a fuller picture of both the Republicans’ and Democrats’ agendas on housing.
AND TO SAY THE LEAST I AM UNDERWHELMED.
In the wake of both conventions, each party has made their official party platforms public, and yes, they both at least try to address some aspects of the foreclosure crisis.
With the Democrats, there is a firmer grasp of the housing picture, but I still haven’t heard a solution from them that has the teeth to have a lasting impact.
They recognize the importance of refinancing, which is good, but to date nothing they have done has forced the banks to refinance. So the intent is there, but there is little actual follow through.
Not HARP or any of the alphabet soup programs created during the last four years have done anything to truly encourage refinancing. There’s too much please and thank you in the Democrats programs, when it is time for them to be the stern parent and send the banks to bed without their supper.
You must make refinancing in the banks’ best interest, to me the only way for that to happen would be to reinstate Franklin Roosevelt’s Home Owners Loan Corporation.
It closed up shop in the 1950’s, and mortgage lending hasn’t been the same since.
A program like the HOLC, in my opinion, would have the magnitude to force the banks hand, and it would be the most appropriate way to deal with the housing crisis and encourage responsible lending.
The President, for all his tough talk on Wall Street now, watched as agencies such as the Federal Reserve practically became another arm of the Wall Street banks after the bailouts.
In reality, the President allowed his housing policy to be dictated by people who were more intent on appeasing Wall Street than helping Main Street.
Obama was misguided and misdirected. I believe he was sincere when he told the DNC audience that Wall Street and Main Street should play by the same rules, but that will only happen if he puts some distance between the regulators and the bankers should he win a second term.
As for the GOP, I find it funny their housing plan is twice as long as the Democrats, yet there is even less details on what they plan to do.
Lots of verbose language and platitudes, more than a few contradictions, and of course lots of blame directed at the other side of the fence.
Both the GOP’s and Mitt Romney’s official platforms place a heap of blame at Fannie Mae and Freddie Mac, and an imperative that they will limit their size and scope.
This comes after they rail on Dodd-Frank and the current administration’s over regulation of the housing market.
So on one hand, the Republicans want the government to do less about the housing crisis, but they also want to government to do more.
Sorry kids, you cannot have it both ways.
I want Fannie and Freddie out of the housing game too, but I fear the Republicans will pull the plug much too quickly, and all that will most certainly lead to another depression.
Perhaps most maddening is that both parties got it wrong on principal reduction.
The Democrats don’t bother with addressing write downs in their platform at all, and the Republicans explicitly say they won’t use it to help homeowners. Yet a program to address this very issue for underwater homeowners worked during FDR’s tenure and could work today.
It just shows that neither party still has a plan with all the right answers, and further proves my theory that the solutions to maintaining a healthy real estate market, and therefore a healthy economy, will come from the ground floor and not the 30,000 foot view that both parties maintain.
From The Trenches,
Tags: banking in the united states, crisis, dodd frank wall street reform and consumer protection act, economics, economy of the united states, emergency economic stabilization act, fannie mae, foreclosure crisis, Freddie Mac, housing, housing crisis, housing market, housing plan, housing sector, late 2000s financial crisis, mortgage industry of the united states, official party, politics, subprime mortgage crisis, the housing, the housing market, united states federal banking legislation