A Foolish Proposal

As a shameless partisan hack, I do try at least to point fingers at my side of the aisle when appropriate – and certainly loads of Democrats in the Senate deserve more than finger-pointing for caving in on the FISA bill yesterday. But there’s one thing I think is so wrong-headed that I haven’t seen nearly enough attention to – it’s Hillary Clinton’s proposal on how to solve the mortgage crisis, which incorrectly often gets called the ‘subprime mess.’ (It’s not nearly limited to those crappy loans.)

Her proposal, among other things, includes “…an automatic rate freeze on subprime mortgages of at least five years or until servicers have converted the unworkable mortgages into loans families can afford.”

All evidence points to Senator Clinton as being especially bright, perhaps even more so than her husband who is probably THE smartest president in recent memory. But this is just plain stupid. To solve this mess, you need to help both sides of the equation – and working to get to a level where the people who – let’s be frank – were stupid enough to sign their names onto loans they didn’t understand – simply means that the servicers will continue to lose money. Assuming they don’t go broke, they have to raise rates and/or fees elsewhere, which merely shifts this problem to other consumers.

Of course, any one looking seriously at this proposal would understand this, and one expects that includes Senator Clinton herself. But why quibble with details? This probably sounds good to her campaign staff and I’m sure it plays well. I respect Senator Obama for many things, including his dismissal of this in their CNN debate a few weeks ago:

I have not signed on to the notion of an interest rates freeze, and the reason is not because we need to protect the banks. The problem is, is that if we have such a freeze, mortgage interest rates will go up across the board and you will have a lot of people who are currently trying to get mortgages who will actually have more of a difficult time.

So, some of the people that we want to protect could end up being hurt by such a plan.

Now, keep in mind, the one thing I suspect that Senator Clinton and I agree on. Part of the reason we are in this mortgage mess is because there's been complete lack of oversight on the part of the Bush administration.

Many people state that Obama is all substance and no specifics, but that's completely untrue. And this is one clear case where Clinton's specifics are just boneheaded.