What specific proposals does McCain have to reform our mortgage industry?

[Anonymous]

OK, me again -- the poster who is always looking for specifics.

(Note: I am not an economist or in any way qualified to understand the intricacies of what is going on with our banking system apparent meltdown. I'm just trying to figure it all out and figure out who has the better grasp on the situation. And I am taking with a huge grain of salt what both candidates say about what they will do in the future, because I think the situation is changing daily, and whatever they say now will likely have to change. HOWEVER -- you can tell something about their basic principles -- do they want to wait until things fail, and then punish those who failed, or do they want to intervene proactively, and provide more regulation and oversight ahead of time, so we don't have these problems?)

Here's what Obama proposes:

http://www.barackobama.com/issues/economy/#home-ownership

Ensure More Accountability in the Subprime Mortgage Industry:

Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.

Mandate Accurate Loan Disclosure:

Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

Close Bankruptcy Loophole for Mortgage Companies:

Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.

QUESTION for anyone who might know: is it true that Obama's STOP FRAUD Act provided the first federal definition of mortgage fraud? That seems incredible to me.


OK, now on to McCain's specific proposals re: mortgage reform:

http://www.johnmccain.com/Images/Issues/JobsforAmerica/briefing.pdf

John McCain's approach to helping sub-prime or other financially strapped mortgage borrowers is built on sound principles:

• No taxpayer money should bail out real estate speculators or financial market participants who failed to perform due diligence in assessing credit risks. Any assistance for borrowers should be focused solely on homeowners and any government assistance to the banking system should be based solely on preventing systemic risk.

• Any policy of financial assistance should be accompanied by reforms that promote greater transparency and accountability to ensure we never face this problem again.

OK -- again -- WHAT specifically is McCain proposing here? What will bring about the greater transparency? What will bring about the greater accountability? McCain's proposals just sound very, very vague to me. Is he willing to fund more oversight and regulation of the banking industry?

[Anonymous]

Here's an article with a few points from McCain:

http://articles.latimes.com/2008/mar/26/nation/na-mccain26

Here's one section of it:

But, alluding to intervention by the Federal Reserve and the Bush administration in the controversial rescue of Wall Street brokerage firm Bear Stearns Cos., McCain said he was “committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

“Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy,” he said.

Going forward, McCain called for more transparency and accountability from lenders. He advocated that any government assistance should be for homeowners alone, not those who bought homes with the goal of turning them into rental properties. He added that any aid should be temporary “and must not reward people who were irresponsible at the expense of those who weren’t.”

“I will not play election-year politics with the housing crisis,” he said, speaking to Latino small-business owners who listened to his remarks from the factory floor at C&H Letterpress Inc. in Santa Ana. “I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now.”

McCain called for a meeting of the nation’s accounting professionals and a separate meeting of the nation’s top mortgage lenders. He called on the mortgage lenders to “pledge to do everything possible to keep families in their homes and businesses growing,” citing the example of General Motors Corp. – which offered no-interest financing to its customers after Sept. 11, 2001.

“We need a similar response by the mortgage lenders,” McCain said. “They’ve been asking the government to help them out. I’m now calling upon them to help their customers, and their nation. It’s time to help American families.”

The Arizona senator said he did not agree with proposals to reduce the down-payment requirements for FHA mortgages and said that over time those requirements should be raised. “So many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with.”


But here's a question back: who is responsible for monitoring your personal (or business) finances? You, or the federal (???) government? Brokers negotiated loans people couldn't afford; people accepted them. Both were irresponsible. I agree with McCain that transparency is the key. Banks are in trouble because they didn't know what kind of loans they were buying. People (which I am using broadly--including businesses) somehow didn't think the bubble would burst. I understand not knowing WHEN the bubble would burst, but come on. Let's be reasonable. Those prices could not be sustained. People need to know what they are getting into--terms of loans, etc. I'm all for transparency--between borrowers, lenders, and whoever ultimately buys the loans. But do YOU want the federal government controlling your personal purse strings? I sure don't. Nor do I want my tax dollars rescuing those who acted irresponsibly. And like McCain, I'm not talking about people who bought a house they could afford at the time, lost their job, and are now facing foreclosure. I'm talking about people who were looking to make a quick buck and failed, or that got into loans they knew they couldn't afford in the first place--especially when it was not for their own primary residence.

[Anonymous]

Thanks for your reply, PP.

You asked this:

But here's a question back: who is responsible for monitoring your personal (or business) finances? You, or the federal (???) government? Brokers negotiated loans people couldn't afford; people accepted them. Both were irresponsible.

Well, I do think I personally am responsible for monitoring my own finances. But clearly there was something going on in the mortgage industry that shouldn't have been allowed. For the benefit of the economy, of our communities, banks should be strongly regulated so as not to allow large groups of people to borrow money than people KNEW very likely, large groups of them would never be able to afford to pay back.

In days gone by, when banks actually held the mortgages they approved, it was enough to rely on the banks self-interest to make sure only prudent loans were made. If banks screwed up, it would be the banks that failed.

But something seems to have changed. Banks were allowed to apporve the mortgages and then divvy them up somehow and sell them to other investors, who were able to make a LOT of money off of people without really understanding the risk that they were taking. I'm really not sure on the details of exactly what happened here. But it seems to me that for several years people knew these financial shenanigans were going on, and could have done something, and that the fderal government should have stepped in and started more careful regulating of the practices that were going on, rather than relying on "market forces" to contrain abuse.

So, I guess I really do support a lot more regulation of the mortgage industry. Not because I want the federal government interfering in my personal decisions as to what I can afford to buy, but because for the benefit of my entire community, and the economy, I think we need more safeguards. For instance, when my husband and I bout our home, we knew enough to only buy a home that was worth about 2.5x our income, and we got a reasonable rate and so on. That's what a prudent financial advisor would recommend, right? But in plenty of areas, banks were approving much higher and riskier loans.

OK, so tough for the "idiots" who took out a mortgage they couldn't afford -- only -- if they happen to live on your street, or in your town, their foreclosures directly affect you -- I read somewhere that each house that is foreclosed on, on your street, brings down the value of your house by about $3,000. What happens to other people directly affects me. So I want more regulation on the mortgage industry, and I wish it had happened earlier, too!

I agree with McCain that transparency is the key. Banks are in trouble because they didn't know what kind of loans they were buying.

I would go a step further. Banks are in trouble because they should never have been allowed to do what they were doing in the first place. It wasn't financially prudent and it was too open for abuse. But people got rich off of doing it, and I can't help but suspect that the people who were getting rich off of it were the same people iwho were well connected to the people who were supposed to be regulating the industry to begin with.

Nor do I want my tax dollars rescuing those who acted irresponsibly. And like McCain, I'm not talking about people who bought a house they could afford at the time, lost their job, and are now facing foreclosure. I'm talking about people who were looking to make a quick buck and failed, or that got into loans they knew they couldn't afford in the first place--especially when it was not for their own primary residence.

I'm with you there. I hate to see tax money going to bail out the huge entities that entered these risky financial waters and then lost money. What's the saying? We have privatized the profit but subsidized the losses?

As I said earlier, I'm really not at all sure of what happened and what is hapening with mortgages and the entire economy, so I'm sure I've gotten some things wrong here -- but overall, I really think I want more responsible regulation and oversight by the federal government into our mortgage industry as well as into how banks are run.

I will support the candidate who wants the same!

[Anonymous]

http://thinkprogress.org/wonkroom/2008/09/16/mccain-regulation-2

John McCain Vs. John McCain On Regulation

In the last few days, the U.S. financial system has been thrown into turmoil by the failure of Lehman Brothers and Merrill Lynch, the troubles of insurance giant AIG, and the corresponding drop in the stock market.

This evidently sparked a debate regarding government regulation of the financial markets within the McCain campaign, and McCain just can’t decide which way he wants to have it.

Here is a look at McCain’s back-and-forth on regulation during the last 24 hours:

[Anonymous]

Anonymous wrote:Thanks for your reply, PP.

You asked this:

But here's a question back: who is responsible for monitoring your personal (or business) finances? You, or the federal (???) government? Brokers negotiated loans people couldn't afford; people accepted them. Both were irresponsible.

Well, I do think I personally am responsible for monitoring my own finances. But clearly there was something going on in the mortgage industry that shouldn't have been allowed. For the benefit of the economy, of our communities, banks should be strongly regulated so as not to allow large groups of people to borrow money than people KNEW very likely, large groups of them would never be able to afford to pay back.

In days gone by, when banks actually held the mortgages they approved, it was enough to rely on the banks self-interest to make sure only prudent loans were made. If banks screwed up, it would be the banks that failed.

But something seems to have changed. Banks were allowed to apporve the mortgages and then divvy them up somehow and sell them to other investors, who were able to make a LOT of money off of people without really understanding the risk that they were taking. I'm really not sure on the details of exactly what happened here. But it seems to me that for several years people knew these financial shenanigans were going on, and could have done something, and that the fderal government should have stepped in and started more careful regulating of the practices that were going on, rather than relying on "market forces" to contrain abuse.

So, I guess I really do support a lot more regulation of the mortgage industry. Not because I want the federal government interfering in my personal decisions as to what I can afford to buy, but because for the benefit of my entire community, and the economy, I think we need more safeguards. For instance, when my husband and I bout our home, we knew enough to only buy a home that was worth about 2.5x our income, and we got a reasonable rate and so on. That's what a prudent financial advisor would recommend, right? But in plenty of areas, banks were approving much higher and riskier loans.

OK, so tough for the "idiots" who took out a mortgage they couldn't afford -- only -- if they happen to live on your street, or in your town, their foreclosures directly affect you -- I read somewhere that each house that is foreclosed on, on your street, brings down the value of your house by about $3,000. What happens to other people directly affects me. So I want more regulation on the mortgage industry, and I wish it had happened earlier, too!

I agree with McCain that transparency is the key. Banks are in trouble because they didn't know what kind of loans they were buying.

I would go a step further. Banks are in trouble because they should never have been allowed to do what they were doing in the first place. It wasn't financially prudent and it was too open for abuse. But people got rich off of doing it, and I can't help but suspect that the people who were getting rich off of it were the same people iwho were well connected to the people who were supposed to be regulating the industry to begin with.

Nor do I want my tax dollars rescuing those who acted irresponsibly. And like McCain, I'm not talking about people who bought a house they could afford at the time, lost their job, and are now facing foreclosure. I'm talking about people who were looking to make a quick buck and failed, or that got into loans they knew they couldn't afford in the first place--especially when it was not for their own primary residence.

I'm with you there. I hate to see tax money going to bail out the huge entities that entered these risky financial waters and then lost money. What's the saying? We have privatized the profit but subsidized the losses?

As I said earlier, I'm really not at all sure of what happened and what is hapening with mortgages and the entire economy, so I'm sure I've gotten some things wrong here -- but overall, I really think I want more responsible regulation and oversight by the federal government into our mortgage industry as well as into how banks are run.

I will support the candidate who wants the same!
McCain declared on Monday that "the fundamentals of our economy are strong." Then, after Obama accused him of being out of touch, he conceded the country was in an economic crisis but still said the fundamental strength of the American worker remained strong.

On Tuesday, McCain struck a populist chord against Wall Street greed. He called for a commission to probe the root causes of the country's financial mess _ such as the high-level panel that investigated the Sept. 11, 2001, attacks. And he reiterated that no more taxpayer money should be used to rescue private institutions such as the large insurer AIG.

Hours later, he used a rally before several thousand in Tampa to promise that "if Gov. Palin and I are elected in 49 days we're not going to waste a moment in changing the way Washington does business."

Obama said the nation did not need another commission, like the one proposed by McCain.

"History shows us that there's no substitute for presidential leadership in times of economic crisis," he said. "FDR and Harry Truman didn't put their heads in the sand and hand accountability over to a commission. Bill Clinton didn't put off hard choices. They led and that's what I will do."

(He gave examples of oversight and regulation)

[Anonymous]

[quote=AnonymousMcCain declared on Monday that "the fundamentals of our economy are strong." Then, after Obama accused him of being out of touch, he conceded the country was in an economic crisis but still said the fundamental strength of the American worker remained strong.

On Tuesday, McCain struck a populist chord against Wall Street greed. He called for a commission to probe the root causes of the country's financial mess _ such as the high-level panel that investigated the Sept. 11, 2001, attacks. And he reiterated that no more taxpayer money should be used to rescue private institutions such as the large insurer AIG.

Hours later, he used a rally before several thousand in Tampa to promise that "if Gov. Palin and I are elected in 49 days we're not going to waste a moment in changing the way Washington does business."

Obama said the nation did not need another commission, like the one proposed by McCain.

"History shows us that there's no substitute for presidential leadership in times of economic crisis," he said. "FDR and Harry Truman didn't put their heads in the sand and hand accountability over to a commission. Bill Clinton didn't put off hard choices. They led and that's what I will do."

(He gave examples of oversight and regulation)






Not sure what you are suggesting... should the President (whoever that might be) whip out a magnifying glass and conduct the investigation himself? No matter who wins, it will be someone new to the white house. That person is going to have to learn before they can lead. Good leadership involves finding good and appropriate people to delegate to (people who will investigate and report back). I would hope either candidate would do this.