Legal Commentary

What If ? HOLC

By Big Tent Democrat

One of the dumber things we do is speculation how a different President may have acted if they had been in President Obama's place. No one knows. That said, via Balloon Juice, this Dana Milbank column that plays the "what would Hillary have done?" game, misses the biggest what if - HOLC over HAMP. Milbank writes:

Clinton, for example, first called for a 90-day foreclosure moratorium in December 2007, as part of a package to fight the early stages of the mortgage crisis with a five-year freeze on subprime rates and $30 billion to avoid foreclosures. But an Obama campaign adviser dismissed Clinton's moratorium, saying it would "reward people for bad behavior."

Clinton's more important proposal was HOLC:

I've proposed a new Home Owners' Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We've got to stem the tide of failing mortgages and give the markets time to recover.

The time for ideological, partisan arguments against these actions is over. For years, the calls to provide borrowers an affordable opportunity to avoid foreclosure as a means of preventing wider turmoil were dismissed as government intrusion into the private marketplace. My proposals over the past two years were derided as too much, too soon. Now we are forced to reckon with too little, too late.

As a result, the home-mortgage crisis slowly eroded the value of debt instruments upon which Wall Street firms were depending. That is how this house of borrowed cards began to fall. If we do not take action to address the crisis facing borrowers, we'll never solve the crisis facing lenders. These problems go hand in hand. And if we are going to take on the mortgage debt of storied Wall Street giants, we ought to extend the same help to struggling, middle-class families.

The HOLC proposal garnered bipartisan support, as John McCain also proposed a HOLC.

And it is not too late for President Obama to embrace HOLC. He does not need Congressional action and the HAMP money remains largely unused. It is still time for HOLC.

Speaking for me only

Full post as published by TalkLeft on November 07, 2010 (boomark / email).