John McCain on the Housing Crisis — No Help for Homeowners

All Spin Zone � John McCain on the Housing Crisis — No Help for Homeowners

John McCain on the Housing Crisis — No Help for Homeowners

John McCain has come out in favor of helping out Bear Stearns, but not consumers in the big mortgage/housing crisis. Sure, Bear Stearns was irresponsible in loading up on questionable loans, but he’ll give them a bailout. The regular guy? No help from John McCain.

Commentary By: Steven Reynolds

John McCain made at least part of his reputation sponsoring government help in the financial sector in this country, despite his protestations that economics is his weak suit. Yesterday McCain addressed the Housing crisis in this country that has left many thousands of people struggling with their mortgages. In the wake of government bailouts for lenders, one would think that some help for the “average Joe” might be a good thing, but McCain can’t help being a maverick, or perhaps he can’t help toeing the Republican line, helping big business but not the common family. Here’s what he says about helping the little guy, from the Philadelphia Inquirer:

“I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers,” McCain said. “Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.”

He said any government assistance to alleviate the housing crisis must be temporary and should be accompanied by reforms that aim to make the system more transparent and accountable to prevent a repeat of the crisis. He said no assistance should be given to speculators, or people who bought houses to rent or as second homes.

Asked whether the Fed went too far in helping Bear Stearns, McCain said: “It’s a close call, but I don’t think so.” He said he doesn’t support federal bailouts unless it has catastrophic effects on the entire financial marketplace and there were indications that a Bear Stearns failure would have rippled across the entire economy.

McCain also said people shouldn’t be able to buy homes with little or no money down, such as the interest-only loans banks have given the last few years. Lenders, he said, “should never insure loans when the homeowner clearly does not have skin in the game.”

The article is right to dispute that “always,” remembering how McCain, as a Freshamn Senator in 1991 worked diligently behind the scenes to try and stifle investigations and regulations that would harm his good friend Charles Keating (here’s a little precis of McCain’s involvement with Keating and here’s an article from just a couple days ago where McCain says he learned from his ethical lapses as a member of the Keating 5). McCain’s actions only exacerbated the savings and loan crisis of the early 90’s, a crisis that cost the federal government billions and billions of dollars. No, he has not “always” been against propping up big business. Indeed, here McCain supports (though he gave himself weasel room) the bailout of Bear Stearns. What’s obvious is that he’s not going to support helping out the little guy who is struggling with his mortgage.

Now I’ll agree that there are lots of folks out there, probably, who bit off more than they could chew when they signed onto a mortgage over the last few years. Those mortgages were very enticing, and the big financial giants likely knew that if there was any downturn in the housing markets, thousands and thousands of their customers wouldn’t be able to keep their homes. McCain, of course, is against regulation of the financial industry, as evidenced by his role in the Keating 5 scandal, so he stood by as this mortgage crisis grew over the past few years. You know, even if some consumers bit off more than their income supported with some mortgages, you can’t regulate individuals. It’s logistically too hard to do so. One regulates the business sector, and McCain is against that, though he’s fine with bailing them out when they make massive mistakes.

There’s the bottom line. McCain is in favor of little in the way of government regulation, which might have had a chance at preventing this crisis, but he sure seems in favor of bailing out irresponsible businesses. Bailing out the average citizen, who in some cases were victims of predatory loans? Not so much, eh?

One wonders whether John McCain has accepted free rides on the airplanes of Citigroup or Bear Stearns or any other of these massive banks that has been hit by this crisis. And how many of those trips were to the Bahamas? Oops, that was Keating 5 stuff, isn’t it, and he SAYS he’s learned from that.