The Mortgage Crisis: a Campaign Issue on Which Clinton Steps Forward

As we come down the home stretch in the primaries, Clinton may be hitching her wagon — at least in part — to the mortgage crisis. It was my impression that because of her stance on the war and her association with the conservative social policies of her husband, she lost much of the support from the left. Over the campaign she has moved her position on the war so as to try to make it indistinguishable from that of Obama. (At least according to their websites there is actually a rather clear difference between the two with Clinton wanting to keep permanent military bases in Iraq with attendant commitments and she all but authorizing an attack on Iran by voting to designate part of its army a terrorist organization.) During the campaign she has also distanced herself from the domestic policies of her husband by increasingly appealing to populist sentiment.

This approach has crystallized in her proposals with respect to the mortgage crisis. She has proposed that a $30 billion fund be created to assist homeowners in crisis and is clearly approaching this from the mortgage consumer side. She proposes a 90-day moratorium on foreclosures and would freeze the interest rate on adjustable rate subprime loans. This should play well in industrial states with upcoming primaries.

Clinton has seemed to be generally consistent in this regard. At least since August she has focused on the need for consumer relief while Obama has emphasized the need for regulation of the industry. Since Edwards left the race she has adopted some of his proposals (this is part of her move to the left) in advocating a moratorium and freeze on subprime interest rates. To further buttress her populist confides, Clinton borrowed from Barney Frank and Christopher Dodd in recommending that the Federal Housing Administration be given enhanced power to oversee and perhaps to guarantee or purchase defaulted loans.

Obama is clearly fixed toward the center, advocating a conservative response to the crisis. He now proposes a smaller fund for homeowners ($10 billion) and offers a lot of talk about restraint and vague talk about regulation.

On this issue Obama and McCain appear to be closer to each other than either is to Clinton, although Obama certainly sees himself as closer to Clinton than to McCain.

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