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Obama Now Rejects McCain's Mortgage Buy-Up Plan

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October 08, 2008 8:17 PM

ABC News' Teddy Davis and Rigel Anderson Report: Barack Obama's top economic adviser criticized John McCain's mortgage buy-up plan on Wednesday, saying it would cause the government to lose money by paying too much for bad loans.

McCain's top economic adviser responded with a statement of his own in which he argued that Obama would "rather support a bailout of Wall Street than rescue Main Street America."

During Tuesday's debate, McCain proposed devoting nearly half the $700 billion from the recent financial rescue package to buying troubled mortgages directly, rather than indirectly aiding the nation's financial markets by buying up mortgage securities.

The Obama campaign's initial reaction was a version of "me, too," and his press aides circulated a quote from last month when Obama had floated a similar idea while stopping short of formally proposing it.

"We could consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities," said Obama while campaigning in Clearwater, Fla., on Sept. 23. "In the past, such an approach has allowed taxpayers to profit as the housing market recovered. But, this is not simply a question of looking out for homeowners, it's doubtful that the economy as a whole can recover without the restoration of our housing sector, including a rebound in the home values that have suffered dramatically in recent months."

But as more details about the plan began to emerge on Wednesday, Obama's campaign shifted gears and came out against it.

Here are Tuesday's dueling statements:

Obama-Biden economic policy director Jason Furman : "Senator McCain’s first response to this economic crisis was to say that the fundamentals of our economy are strong. Since then, he’s acknowledged that there is a crisis and offered multiple plans, sometimes conflicting. Last night, in his latest attempt to get it right, he threw out a proposal that appeared to give the Treasury authority it already has to re-structure troubled mortgages. But now that he’s finally released the details of his plan, it turns out it’s even more costly and out-of-touch than we ever imagined. John McCain wants the government to massively overpay for mortgages in a plan that would guarantee taxpayers lose money, and put them at risk of losing even more if home values don’t recover. The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud. Since this beginning of this crisis, Barack Obama has demanded that any rescue plan must protect taxpayers and ensure that they share in any profit once the economy recovers, and he worked to include that principle in the plan that passed Congress. John McCain’s plan to overpay for bad mortgages by handing taxpayer dollars over to big financial institutions is erratic policy-making at its worst, and it’s not the change we need to strengthen our economy, create new jobs, and keep Americans in their homes ."

McCain-Palin senior policy adviser Douglas Holtz-Eakin: "By opposing John McCain's effort to help Americans stay in their homes, it is clear that Barack Obama would rather support a bailout of Wall Street than rescue Main Street America. Unlike Barack Obama, John McCain doesn't believe that working to keep Americans in their homes is 'too costly' and 'out of touch.' From his campaign's comments, it is clear that Barack Obama would rather see the taxpayers' money go to corrupt Wall Street firms like AIG than keeping Americans in their homes. If Barack Obama wants to defend using the taxpayers' money to prop up Wall Street instead of keeping people in their homes and providing jobs on Main Street, John McCain is happy to have that debate. Barack Obama says he wants to protect taxpayers but apparently that does not include protecting their homes."

October 8, 2008 | Permalink | User Comments (212)

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Good for him.. we have been spending $500 billion a year of money we don't have.. another $10 billion a month on Iraq that we don't have.. Just did a $700 billion bailout with money we don't have, and now McCain suggests that we dump another couple hundred billion that we don't have. Unbelievable!

Posted by: Concerned American | Oct 8, 2008 8:28:44 PM

Do voters look at this as a well-deserved bailout for them or an undue risk to taxpayers and even more obscene spending on a bailout?

http://www.political-buzz.com/

Posted by: matt | Oct 8, 2008 8:28:47 PM


If Obama rejects McCain's plan about
mortgage buy-up....well the voters
need to reject Obama in november....

Best choice is:
McCAIN/PALIN '08

Posted by: Nicholas | Oct 8, 2008 8:35:54 PM

What would Ron Paul do? That is what I want to know.

Posted by: Jim | Oct 8, 2008 8:36:47 PM

Concerned American: there are many way s the US government can collect and pay for everything. One excellent way is TAX.

Posted by: Kottaras | Oct 8, 2008 8:42:24 PM

Obama never never had a solid stand on anything.

He said he didn't vote for Iraq war, but at that time, he was not US senator yet; after he officially became US senator, he voted for YES.

Posted by: golfgirlusa | Oct 8, 2008 8:43:02 PM

McCain is a socialist by supporting this plan. Liberal right!

Posted by: frank | Oct 8, 2008 8:43:05 PM

Of course. Obama the former Democratic Socialists of America member would rather give the homes away.

Posted by: geevill | Oct 8, 2008 8:46:30 PM

Obama=The True Conservative.

Posted by: JJ | Oct 8, 2008 8:46:41 PM

how is this really fair? I could have gotten a 'bad' loan for a house I couldn't afford, but chose to live within my means. Does this mean that the bailout will allow people who shouldn't have bought the houses to stay in them for whatever they can pay? How does this help me? I pay taxes too? This will end up dropping the bottom out of house prices for the hard working people who purchased a house they could afford. Shame on congress for this policy and John McCain for supporting it! Is this like HUD? Why can't I get a half million dollar, six bedroom house for interest only then let the government allow me to pay off a $200,000 house because it was a 'bad loan'. Thanks to this practice, I won't be able to get a home loan until this crisis is over - banks won't lend money to anyone right now!! How is this ok? What do the rest of us get out of this? NOTHING

Posted by: citizen | Oct 8, 2008 8:49:23 PM

-- Concerned American: there are many way s the US government can collect and pay for everything. One excellent way is TAX. --

Exactly, and yet McCain wants to cut taxes across the board and keeps proposing more spending. That is why Obama has a better chance at closing the gap. McCain seems to think we can just keep borrowing forever.

Posted by: Concerned American | Oct 8, 2008 8:49:53 PM

And 3 of Obama's advisors on the economy(Raines, Howard and Johnson) are the same guys who cooked the books at Fannie Mae and started this whole fiasco...its real smart to listen to them guys.

Posted by: lucylinc | Oct 8, 2008 8:49:57 PM

McCain's plan is simply not a good idea...Why attack Obama for not backing a horrible idea...McCain clearly did not evaluate his plan to conclusion.

Posted by: lanawonders | Oct 8, 2008 8:51:06 PM

-- He said he didn't vote for Iraq war, but at that time, he was not US senator yet; after he officially became US senator, he voted for YES. --

He was very vocal about his stance against the war when he was an Illinois senator. And how can you vote 'YES' to something that has already occurred? Time travel?

Posted by: Concerned American | Oct 8, 2008 8:51:49 PM

So $300 BILLION MORE IN TAX DOLLARS to buy bad debt is McCain's version of a "spending freeze"?

And he said both of these ideas about ten minutes apart.

The man is so out of touch he doesn't even know what he is saying.

All he says is "I know how to..."

Apparently McCain's version of "change" means changing the meaning of words.

Posted by: Dave in PA | Oct 8, 2008 8:52:33 PM

-- If Obama rejects McCain's plan about
mortgage buy-up....well the voters
need to reject Obama in november.... --

Nicholas, (and geevill) please explain?
Are you guys just so in love with whatever McCain says, or just so anti-Obama that you would voice the opposite regardless?

Posted by: Concerned American | Oct 8, 2008 8:54:53 PM

Ha Geevil,

YOUR guy just suggested a $300 BILLION government buy out!

Who's the "socialist" again?

Your too funny!

Hahahha.

Posted by: Dave in PA | Oct 8, 2008 8:55:07 PM

-- its real smart to listen to them --

Lucylinc.. you might want to check out your 'facts' about economic advisors.

Posted by: Concerned American | Oct 8, 2008 8:57:42 PM

Golfgirl,

Get real. Either you know this and just rant BS, or you are completely naive. Either way, pretty lame.

Obama voted to support our troops who had already been deployed and make sure they have what they need. As he should.

That is NOT the same as voting to go to war in a country that never posed a threat like McCain did.

Posted by: Rachel | Oct 8, 2008 8:59:12 PM

The deal has changed. As a former Hillary supporter I finally decided to support McCain as a leader with grit. I'm now turning against McCain because of the detestable behavior of some of McCain's followers. When the crowd starts saying that Obama is a terrorist and to kill him, that's where I draw the line. I will now commit to Obama as a matter of principle, to take a stand against the ugliest of right wing hatred. Given this development he is clearly the right man for the Presidency at this time in history.

Posted by: WestCoastMessenger | Oct 8, 2008 9:00:41 PM

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