February 04, 2012 7:03 PM
BARACK OBAMA
GUEST COLUMNIST
In my State of the Union Address, I laid out a blueprint for an economy that’s built to last — an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values of fairness and responsibility.
Over the past decade, we strayed from those values and we saw what happened. Millions of families who did the right thing were hurt when the massive housing bubble burst. Folks who shopped for a home they could afford, secured a mortgage and made their payments each month were hurt by those who weren’t playing by the same rules. Lenders who sold loans to people who couldn’t afford them, buyers who bought homes they knew they couldn’t afford and banks that packaged and traded bad mortgages to reap phantom profits.
These actions triggered the worst economic crisis of our lifetimes and the housing crisis remains the single biggest drag on our recovery.
It will take more time than any of us would like for the housing market to fully recover from this crisis, and government certainly can’t fix the entire problem on its own. However, it is wrong for anybody to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom. I refuse to accept that, and so do the American people.
This is a make-or-break moment for the middle class, and this housing crisis struck right at the heart of what it means to be middle class in America: owning a home. Homes are where we invest our nest egg, where we raise our family, where we plant roots in a community and build memories.
The housing plan we launched a couple years ago has helped nearly 1 million responsible homeowners refinance their mortgages and save an average of $300 each month. But even with rates at historic lows, too many families are underwater and unable to refinance.
There are more than 10 million homeowners across the country right now who, because of an unprecedented decline in home prices, owe more on their mortgage than their homes are worth. For those responsible homeowners, there are actions we can take right now to provide some relief.
That’s why I’m sending Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at today’s low rates. No more red tape or runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust.
This plan, like the other actions we’ve taken, will not help those who bought a house they couldn’t afford and then walked away, leaving a foreclosed home behind. It’s not designed for those who’ve acted irresponsibly or those who flipped multiple homes to make a quick buck. But this plan can help millions who make their payments on time and yet remain trapped under falling home values.
For this, we need Congress to act. Until they do, however, I will not wait to prevent the same kinds of abuses that led to this crisis in the first place. To hold people who broke the law accountable and turn the page on an era of recklessness, I asked my Attorney General to establish a special task force to investigate the irresponsible actions of those banks that packaged and sold risky mortgages.
I’m also proposing a Homeowners Bill of Rights — one straightforward set of common-sense rules of the road for families shopping for a mortgage. No more hidden fees and no more getting the runaround when you call about your loan. New safeguards against inappropriate foreclosures and new options to avoid foreclosure if you’ve fallen on hardship or a run of bad luck. And because Americans making a down payment on their dreams shouldn’t be terrified by pages and pages of fine print, a simple form for new buyers with clear terms and transparent fees.
An economy that’s built to last demands responsibility from everyone. Government must take responsibility for fair rules, banks and lenders must end the practices that helped cause this crisis in the first place. And to recover from the worst economic crisis of our lifetimes, all of us need to take responsibility for our actions.
I’ll keep doing everything I can to make the future brighter for homeowners and families. But Congress needs to act, too. If you’re a homeowner who wants to refinance, call your member of Congress. Tell them not to hold up relief for homeowners like you.
Tell them to pass this plan, help families rebuild their dreams, and make our economy stronger.
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Barack Obama is the 44th president of the United States
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GUEST COLUMN: Obama's potentially harmful answer to the housing crisis
February 11, 2012 7:25 PM
ROSS KAMINSKY GUEST COLUMNIST
The great Austrian economist F.A. Hayek called it the “fatal conceit”: The idea that man, through the power of government, can “shape the world around him according to his wishes.” This arrogance has been the foundation of the Progressive movement for more than a century.
But by its very nature and its complete disconnect from economic reality, this world view — President Obama’s world view — can, like a parasite, only thrive by pitting a claimed benefit for one American against the life and liberty of another. The beneficiary in the relationship no doubt feels that he’s gotten a free lunch, but the victim knows otherwise as the life is slowly drained from him.
And so it is with this week’s chapter of Obama’s ongoing saga “Us versus Them” (ghost-written by David Axelrod), a plan which aims to help homeowners refinance at lower interest rates, with much of the cost covered by a new tax on banks.
One symptom of the president’s fatal conceit is his inability or unwillingness to admit any government culpability in the “problem” he’s claiming to address. Obama complains about “runaround from the banks,” but banks are simply reacting to overzealous regulators which have made them simultaneously fear making loans and not making loans.
He bemoans loans “sold” to those “who bought a house they couldn’t afford,” but doesn’t point out that it was Congress, Fannie Mae, and Freddie Mac who routinely required lower lending standards and threatened banks which didn’t make homeownership more available to “underserved communities.”
He castigates banks and lenders for “practices that helped cause this crisis in the first place,” not mentioning the inescapable fact that many people bought houses for the same reason they buy stocks late in bull markets: because they can’t stand seeing everyone but themselves making money.
And the Federal Reserve’s role in inflating the housing bubble goes unstated even as Fed Chairman Ben Bernanke repeats that devastating policy error with persistent excessively low interest rates.
But even if President Obama understood the cause of the housing crisis, that would not forgive a policy which will do more harm than good. The president calls for a “small” fee on banks, by which he means extracting as much as $10 billion as he magnanimously offers banks “a chance to repay a deficit of trust.” The result will be banks having less capital with which to make mortgage or business loans, and banks raising fees or paying lower interest rates on savings in order to make up for the higher tax bill. The truism remains true: companies don’t pay taxes, consumers do. Obama’s plan is thus nothing more than wealth redistribution from banks’ clients and investors to selected homeowners.
While it is an appealing argument that savings from refinancing will give consumers more disposable income and thereby boost the economy, this ignores the other side of the equation. Every dollar saved by a homeowner is a dollar lost by an investor, including pension and retirement funds owned by tens of millions of Americans. Since most “under water” homeowners are younger than those Americans with significant assets in retirement funds, the Obama plan is a reverse inheritance scheme, transferring wealth from those in or near retirement, and therefore with little remaining earning potential, to those with their best earning years still ahead.
We may feel more sympathy for the homeowner than for the investor, but using government power to enrich the more sympathetic of two parties to a transaction is anathema to the rule of law. Changing the rules of the game while the game is being played is old hat for this administration (just ask former Chrysler bond holders), but it is corrosive to the foundation of economic liberty on which our nation was built.
In the vast majority of cases, homeowners have what they chose to have: a home and a particular mortgage. They are not victims, and the solution to the value of their investment having dropped is not to be found in making victims of the rest of us. Government was the primary cause of the housing crisis; more government is not its solution.
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Ross Kaminsky is a self-employed trader and investor and is the host of The Ross Kaminsky Show on Denver’s NewsRadio 850 KOA.
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To read another article by Ross Kaminsky, click here.
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