Real Estate
Candidates and Subprime Reforms
The 2008 presidential candidates have now voiced their opinions. Clinton and Obama both want drastic overhauls and billions of dollars to head back to mortgagors whereas McCain prefers a more hands-off approach.
Their proposed policies are becoming increasingly important to voters and industry lobbyists with each day that the mortgage crisis worsens. Senator Clinton has called for a 90 day moratorium on foreclosures and a 5 year “freeze” on subprime interest rates. Arguably, this plan - without further restrictions - could benefit many borrowers who took cognizant risks in the real estate market. Obama has vocally opposed any plan that would bailout borrowers and lenders who took on excessive risk - presuming they did so knowingly. McCain falls on the opposite side of the spectrum from Clinton. He has emphasized the importance of the free market and opposes a bailout for those who acted irresponsibly. However, he noted that government intervention is appropriate when it prevents systemic risks - such as the risk presented if Bear Stearns had collapsed.
This is not to say that the candidates opinions are not influenced by lobbyists. In fact, each candidate has reported several million dollars worth of contributions from the financial sector (Clinton - $6.6m, Obama - $6.7 and McCain $3.3m). Greater contributions on the Democratic side reflect their predisposition to favor borrowers over Wall Street.
As the credit crisis deepens, we may see McCain shift his stance toward more regulation. Obama will try to further differentiate himself from Clinton and McCain while appealing to potential supporters on both sides of issue.
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Interesting comments…is this a new blog?