November 30, 2007


Bush's Compassionately Conservative Subprime Fix (James Pethokoukis, 11/30/07, US News)

Plenty of homeowners—especially those who saved up for big down payments so they could get a low-rate fixed mortgage—have little sympathy for their fellow Americans who gambled on subprime loans and the teaser rates that often came with them. And they might be rolling their eyes at news that Hank Paulson and his Treasury Department are nudging the mortgage industry—as Arnold Schwarzenegger has done in California—to voluntarily refrain from resetting some $400 billion worth of subprime adjustable-rate mortgages when the teaser rates expire next year. [...]

The White House had to act. In a way, this is President Bush's compassionate-conservative approach to the mortgage crisis. It doesn't take the hardhearted "moral hazard" approach and allow homeowners who can afford their current mortgages to lose their homes when their loans reset. Yet it doesn't bail everybody out, either. Homeowners who can afford the reset—though it might be painful—as well as those who can't even afford their current teaser rate are probably out of luck.

And the Bush effort falls well short of some more expansive ideas, such as having the government buy up all the bad subprime debt. Nor is it some bureaucratic mandate manufactured in Washington.

Which is why the ideological Right and Left hate the Third Way.

Posted by Orrin Judd at November 30, 2007 3:47 PM
Comments for this post are closed.