dagblog - Comments for "Obama's Jobs speech: Refinance, Refinance & Refinance"

Thanks very much. I thought

Oxy Mora — Sun, 11 Sep 2011 18:13:40 +0000

Thanks very much. I thought it was interesting that the report came out Friday, obviously had been in the works for a while and related to the existing HARP program plus Boxer's legislation, plus whatever heads up they got on Obama's plan.

The CBO estimates 2.9 million borrowers would take advantage of a program which relaxed up front fees and LTV ratio's.

Somehow the CBO whittled a target audience of $4.3 T to about 10% of that, which results in 2.9 million borrowers. These borrowers, according to present law, would have to be within LTV's of 125%.

The Hubbard papers are projecting much much larger percentages of borrowers taking advantage of lower interest rates.

Large scale or small scale it comes right back to the banks, and banks as originators.

Thanks for the reference.

See Brad Plumer at the

anonymous — Sat, 10 Sep 2011 03:47:44 +0000

In reply to Obama's Jobs speech: Refinance, Refinance & Refinance

See Brad Plumer at the Washington Post Friday.

For the record, Obama did

Oxy Mora — Fri, 09 Sep 2011 03:01:13 +0000

In reply to Obama's Jobs speech: Refinance, Refinance & Refinance

For the record, Obama did mention refinance, certainly not with the emphasis I think it should have been given, but in line with the hands-off Geithner deference to banks that has become expected.

It was interesting that Obama mentioned Refinance in the section of his speech of "things the Administration could do on its own without approval from Congress" and that he would be "working with the Federal Housing Agencies" That puts him back at square one, with the GSE's and banks working against him to thwart refinancing.

Perhaps Boxer will push her bill on a separate track and get support for an updated mandate for the GSE's regarding loan to value ratios and removing other road blocks.

It was estimated that the average refinance at 4% would put $2,000 a year in the pockets of the homeowner.

I just don't know what the

Oxy Mora — Thu, 08 Sep 2011 21:43:35 +0000

In reply to Again, what I think is

I just don't know what the complete calculation is for Romney at this point, but it's a great question you raise.

I do think a sensible mortgage refinance program would make Romney more progressive than Obama. By the way Boxer has the support of the Republican, Georgia Senator, who is a former mortgage industry company, as well as the National Association of Realtors, among others.

As for Perry the down side is probably the overall corporate support he has, don't know what specific support he himself is getting from the banks and financial industry.

Could Perry jump in here and

AmericanDreamer — Thu, 08 Sep 2011 20:41:58 +0000

In reply to continued(keep running into a

Could Perry jump in here and become the angry populist against the banks, thus scooping both Romney and Obama, that's the interesting question and the danger of Obama sitting too long on this.

That was the fear I had with McCain in September '08--that he'd wait until Obama signed onto the bailout and then come out against it, trying to capitalize on the anti-big banks sentiment to, perhaps, shift the trajectory of the campaign sufficiently to enable he and Palin to come from behind and win late.

If Perry did go this route, then the questions would be what exactly is he saying he would do if elected? And would people believe him?

I continue to think a Republican, once nominated, has opportunities a Democratic incumbent-- even one as Wall Street-friendly as Obama has been--does not, to coopt a lot of the populist , anti-Washington sentiment in the country. And who knows how many votes that would actually translate into? As I see it this is like a national nerve just waiting to be struck, for several years now. People are furious or worried or both and no one in Washington with power or who gets treated with any respect is saying or doing much of anything about it that seems responsive or promising. The candidate who figures out just how to do it would reap a whirlwind of short-term sympathetic publicity, which they might or might not be able to sustain and build on.

If Obama already has most of the Wall Street money and support locked up, and Perry was trailing in the polls, that would be a very tempting thing for him to do, although he might not do it on this issue, or in this way. He might go cultural instead of economic populist instead. That would be more in character for him, anyway.

Again, what I think is

AmericanDreamer — Thu, 08 Sep 2011 20:09:13 +0000

In reply to Nominated vs. Elected. One of

Again, what I think is fascinating is that R.Glenn Hubbard, Dean Columbia Business School and former chief economic advisors under Bush has a comprehensive paper out spelling all of this in detail, including pluses and minuses for all the oxen who will be gored.

Yes, I agree it's fascinating. Because if you know this, probably a lot of the target audience folks considering whether to give money to Obama, Romney, or no one, know this as well. And wouldn't Romney, if he really is courting these folks, see having Hubbard as a top advisor, given what Hubbard is writing on this, as a risk, one he is so far willing to run? Does all of this suggest that Romney is, as between not just his GOP competition, but as between he and Obama, the more progressive candidate on this one issue of help for underwater mortgage holders?

continued(keep running into a

Oxy Mora — Thu, 08 Sep 2011 19:11:05 +0000

In reply to Nominated vs. Elected. One of

continued(keep running into a problem not being able to do paragraphs)

As for specific indications from Obama, there was some buzz about this last week but not recently.

As for Perry, I would still give him the edge in the nomination, although it seems the entire Eastern Establishment is now on the case against him. He is 10 times a worse option than Romney.

And I agree, the Republicans will try to withhold solutions until they actually get back into the White House. So in that reprehensible way, Romney might be better than Obama.

Could Perry jump in here and become the angry populist against the banks, thus scooping both Romney and Obama, that's the interesting question and the danger of Obama sitting too long on this.

Nominated vs. Elected. One of

Oxy Mora — Thu, 08 Sep 2011 19:05:18 +0000

In reply to Romney can't go there yet but

Nominated vs. Elected. One of the odd things is that Obama and Romney are both courting the same upscale Independents who are fiscally conservative but socially liberal. Many of these, imo, are in the financial industry, and live in the NY environs. And both are courting them during the fund raising time frame, Romney winning. When you do the refinance option you are giving the banks and investors a haircut that they are avoiding in the status quo, not a great idea if your target fund raising audience are in the financial industry. So that I think is Romney's problem of pushing the refinance option in phase 1, get the nomination. But if he should do that and get elected a different situation presents itself. The banks are facing huge losses through the courts, having nothing to do with who is elected. It seems an effective President could use whatever leverage he has to induce settlements(not sure of the mechanics). in the hopes of a grand resolution to bank assets, liabilities, reform of practices, etc. Again, what I think is fascinating is that R.Glenn Hubbard, Dean Columbia Business School and former chief economic advisors under Bush has a comprehensive paper out spelling all of this in detail, including pluses and minuses for all the oxen who will be gored.

Romney can't go there yet but

AmericanDreamer — Thu, 08 Sep 2011 18:24:29 +0000

In reply to Thanks, Dreamer. The way I

Romney can't go there yet but I'm convinced he would if he gets elected.

You mean if he is nominated? That seems to be his first (huge) hurdle.

If the moral hazard argument can be made to go away by not "rewarding" undesirable people then, yes, there doesn't seem to be any good policy explanation for failing to take such actions. There doesn't even seem to be any sensible political explanation, although I'm sure those considering supporting actions such as this are worried about their adversaries mis-characterizing what they're doing in some spicy hot 30-second campaign ad.

In what you're reading are there any indications Obama will announce support for this or some similar proposal tonight?

I really think it is quite distressing and depressing--and lends support to the kind of argument kgb has been making on behalf of a Romney presidency (with a Dem Congress: it's a lot harder to see that happening if Obama loses, it seems to me and also kgb if I read him right) as the least bad outcome--that Romney would or could actually be better on some important issues than Obama is. This issue may be one of them. Your point about Hubbard's views seems to lend some specific plausibility to such an argument. But that specific point he makes only holds if Romney, rather than Perry, wins the nomination. The current opinion I've seen on that suggests Perry is the most likely nominee.

Thanks, Dreamer. The way I

Oxy Mora — Thu, 08 Sep 2011 17:43:18 +0000

In reply to I agree with your main

Thanks, Dreamer. The way I understand Boxer's proposal the homeowner who has been current for a year but underwater would be one of the target audiences. If I got it right, there is not necessarily a principle modification, but forgiveness on loan to value requirements. And as such there doesn't seem to be the argument for moral hazard that there is for loan modifications involving principle reductions. And as Destor is pointing out, the Investor class might be coming around to the idea that if something isn't done, GDP moves sideways forever, and this perhaps hurts them more than taking a haircut now and witholding solutions because of the issue of moral hazard.

To me the Refinance option is as clear as the nose on Obama's face. As I mentioned on my other post, Romney's advisors include R. Glenn Hubbard who has come up with the definitive paper on why the refinance option is the ultimate choice for stimulus and job creation. Romney can't go there yet but I'm convinced he would if he gets elected.

So my question is, why does Obama continue to leave this field open.