Among Clinton’s proposals for the current mortgage crisis is her endorsement of the bill sponsored by Barney Frank and Christopher Dodd, which would give the FHA the ability to guarantee and purchase high risk mortgages. Obama alludes to better regulation. Mr. McCain’s approach seems to be “I think the crisis over. Let’s wait and see.” The Economist is much less laizes faire than Mr. McCain and recommends a couple of the Democrats’ suggestions. It suggests that this might be a good opportunity for the government to buy assets of limited marketability at a big discount, as suggested by Clinton. In line with Obama it says that bailouts of badly run investment banks must come with strings attached in the form of regulatory control to reduce the likelihood of further need for public support.
McCain, I think, in just furrowing his brow and urging restraint is losing whatever chance he has to show leadership in this crisis. As Clinton noted, the circumstances call for something more than platitudes mouthed by Herbert Hoover. The economy is certainly going to be a central feature of the campaign this fall, so why has McCain conceded initiative to the Democrats?
This mortgage crisis is not a trivial matter. The Economist estimates that the loss will be about $1.1 trillion, significantly more than the savings and loan scandal.