Wednesday, October 08, 2008

John McCain, New Dealer!

The format for last night's Presidential debate was terrible. The guests at the so-called Town Hall were not allowed to do anything but ask their pre-approved questions without any follow-up. The candidates were not allowed to address each other directly, nor were they allowed to follow-up on each other's answers. The questions were also poor, culminating in, "What would you do if Iran invaded Israel?" Here's my answer: Iran has never started a war, and this was supposed to be a "domestic policy" debate.

Obama did a good job by not making any mistakes, and by always looking directly at McCain when McCain was speaking. John McCain however repeated all the mistakes he made in the first debate. He mostly refused to look at Obama, instead furiously scribbling notes on his legal pad right up to the closing minute. McCain also again felt it necessary to talk a lot about old guys who most people don't know anything about, including Teddy Roosevelt and Herbert Hoover.

The strangest thing about this debate however was McCain's surprise support for authorizing the treasury secretary to buy the mortgages of homeowners in financial trouble. Now, first let me say that this is a fine idea and I give credit to McCain for supporting it. What's significant is that the Republican nominee for President has embraced an idea that's straight out of Franklin Roosevelt's New Deal.

This proposal would essentially revive the function of the Home Owners' Loan Corporation. From the New York Times: "The HOLC was established in June 1933 to help distressed families avert foreclosures by replacing mortgages that were in or near default with new ones that homeowners could afford. It did so by buying old mortgages from banks — most of which were delighted to trade them in for safe government bonds — and then issuing new loans to homeowners. The HOLC financed itself by borrowing from capital markets and the Treasury. The scale of the operation was impressive. Within two years, the HOLC received about 1.9 million applications from distressed homeowners and granted just over a million new mortgages. (Adjusting only for population growth, the corresponding mortgage figure today would be almost 2.5 million.) Nearly one of every five mortgages in America became owned by the HOLC. Its total lending over its lifetime amounted to $3.5 billion — a colossal sum equal to 5 percent of a year’s gross domestic product at the time. (The corresponding figure today would be about $750 billion.) As a public corporation chartered for a public purpose, the HOLC was a patient and even lenient lender. It tried to keep delinquent borrowers on track with debt counseling, budgeting help and even family meetings. But times were tough in the 1930s, and nearly 20 percent of the HOLC’s borrowers defaulted anyway. So the corporation eventually acquired ownership of about 200,000 houses, nearly all of which were sold by 1944. The HOLC closed its books in 1951, or 15 years after its last 1936 mortgage was paid off, with a small profit. It was a heavy lift, but the incredible HOLC lifted it."

John, as a real New Dealer myself, I salute you for reviving a great government program that helped so many people. But I'm afraid that you're going to make a lot of conservatives very angry.

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