How's It Playing?

As the President's $275 billion foreclosure plan makes its way towards Congress, it's worth taking a closer look at how the proposal is being received in newspapers across the country. Many editorial boards have demonstrated an impressive level of support for the general contours of the plan, yet a range of opinion has emerged on many of its specific provisions.  These areas of disagreement may foreshadow the political fault lines that will emerge when the legislation appears before Congress.  

The Detroit Free Press characterizes President Obama's plan as "practical, fair and praiseworthy" but fears it may be too little too late. "Because a program like this has been needed for nearly two years," the editors explain, "it may not be nearly as effective as it should be." On a daily basis, more and more people fall out of reach of the help being offered.  While making refinancing available to people for up to 105% of the equity in their homes is expected to help up to 5 million people, "nearly 14 million households are believed to be upside down on their mortgages -- and many of them surely are well past the point where a mortgage at 105% of equity will help." 

 

The St. Louis Post-Dispatch says the President's housing plan "is serious in scope and imaginative in approach", but only as far as it goes. The editors believe that the plan needs a "hammer" to force an unrepentant banking industry to make deals that protect communities and keep deserving families in their homes. While they believe the president's program represents a drastic improvement in the government's response to what's become a genuine crisis, the editors are dissapointed the plan won't touch billions of dollars in "toxic" subprime mortgages bundled and sold by Wall Street as mortgage-backed securities. In their view, the real fight is yet to come: will Congress kowtow to lenders who want to prevent changes in bankruptcy law, or will it stand up for the thousands of homeowners whose foreclosures could have been prevented?

The Newark Star-Ledger is also bullish on the Obama plan. Though the editors acknowledge that some undeserving risk-takers might be bailed out by the President's plan, they welcome Obama's efforts to help as many as 9 million families keep their homes.  They believe it is time for some of our rescue money to go to ordinary homeowners rather than "too-big-to-fail" banks "whose appetite for mortgage-backed securities fueled bad lending practices and pumped up the bubble."

In an editorial published on Wednesday, The Dallas Morning News also approved of the President's "aggressive stance" on halting foreclosures.  The editors praise the plan because it allows homeowners who are current on their debt to refinance their houses to lower rates, while also providing Americans who aren't in financial distress the opportunity to take advantage of lower interest rates. In the editors' estimation, "rebuilding the housing market by saving worthy homeowners from foreclosure is as critical to the economic recovery as rescuing banks and creating jobs."

 

Taking stock of both the foreclosure plan and the stimulus package, The Las Vegas Sun believes the President's early efforts to fight the recession show promise. A recession this deep requires immediate government investment, the editors assert, and they commend the foreclosure plan for focusing on people who, through no fault of their own, are struggling to hold onto their homes. The editors conclude that "Obama's responses to the recession to date, each with built-in accountability, will not end the crisis on their own but they represent strong first steps toward achieving that goal."

 

While the depth and breadth of editorial support for the Obama foreclosure plan has been striking, it's worth considering a few contrarian views for perspective. The Panama City (Fla.) News Herald criticizes Obama for keeping bad debts on the books and home values artificially inflated when the housing market desperately needs the opportunity to expunge bad debt and reset prices to match demand. The Las Vegas Review-Journal echoes these concerns, asserting that a great many of those the president seeks to bail out have either spent themselves into oblivion or used an unwise mortgage plan to make purchases that were beyond their means. In the editors' assessment, "the price for all this will be borne by the many Americans who played by the rules and lived within their means." These opposition voices highlight the crucial questions the plan's proponents will have to address as it makes its way through Congress: Why should homeowners who were fiscally responsible subsidize those who weren't? And does the plan diminish incentives for individuals to adopt fiscally responsible behavior?