Bush sees no bailout for lenders and speculators
As banks lobby for what has been described as an "epic rescue plan" for the mortgage industry, President Bush today hardened his oppostion to bailout pla
ns he said would help "lenders and speculators." Bush said such plans would be unfair to millions of homeowners who pay their mortgages on time.
USA Today: "Echoing Treasury Secretary Henry Paulson, Bush says a Senate proposal to deal with the foreclosure crisis would 'do more to bail out lenders and speculators than to help American families keep their homes.' "
Update: It's worth noting the specific objections the administration has to the Senate bill on foreclosures. From CNN Money: "Earlier this week, the Bush administration said the president would veto the Foreclosure Prevention Act of 2008 if it passes Congress because it objected to two key elements.
The first is a provision to change the bankruptcy law and let judges reduce the amount of principal and interest due on mortgages of those filing for bankruptcy. The administration also objects to a provision in the bill that...
would provide $4 billion to let state and local government buy and rehabilitate foreclosed homes, and improve disclosure of subprime mortgage loans in hopes that borrowers won't be surprised by big payment increases."
Commentary: It's impossible to separate politics from principles here. The president knows that bailouts are unpopular, so he argues the bankruptcy changes -- which have nothing to do with a bailout for lenders -- are part of a bailout for lenders. Ah, very clever. Very cute. And completely consistent with the lack of intellectual honesty that dominates American politics at the moment. If you don't like changes in the bankruptcy law, why not step up and say so?
It's also disappointing that, at today's Presidential news conference, none of the reporters bothered to follow up on this.
Still, Paulson's comments (see below) were pretty clear. Paulson shot down talk of a real bailout for lenders. So, some politics, some principle.
The president's comments came a day after his Treasury Secretary dismissed calls for a massive rescue plan for the mortgage industry. From the Wall Street Journal: "The Bush administration is hardening its opposition to the chorus of Democrats, bankers, economists and consumer advocates calling for a big-money government rescue program for struggling homeowners."
This would be the "epic rescue plan" cooked up by Bank of America that the New York Times reported on last Friday.
More: "In an interview yesterday, Treasury Secretary Henry Paulson branded many of the aid proposals circulating in Washington as 'bailouts' for reckless lenders, investors and speculators, rather than measures that would provide meaningful relief to deserving, but cash-strapped, mortgage borrowers."
From Smart Money: "President Bush and other administration officials have voiced skepticism before about a major government effort to ease the burden of the nation's housing slump. But Paulson's comments are the most explicit to date in laying out the administration's opposition to the recent spate of rescue plans.
Thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo credit: Reuters
(This post also appears on The Times' L.A. Land blog.)
Andrew Malcolm's immigrant parents repeatedly stressed the importance of active participation in a democracy. Early lessons included learning the alphabetical list of states by watching televised roll calls of national political conventions. That childhood exposure led to a lifelong fascination with politics, including 40-plus years of covering them and a brief stint practicing them as press secretary to Laura Bush in 1999-2000. A veteran foreign and national correspondent, Malcolm served on the Times Editorial Board and was a Pulitzer finalist in 2004. He is the author of 10 nonfiction books and father of four.
Johanna Neuman is a veteran Washington correspondent for both The Los Angeles Times and USA Today, having covered presidents and politics as far back as Ronald Reagan. A former president of the White House Correspondents Assn., she authored a book on media and foreign policy, “Lights, Camera, Wars.” Most recently she was co-author of the 
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The Republicans are betting that the housing crisis will not deteriorate to the horrible levels that are being depicted on such websites such as www.ml-implode-o-meter,com. I hope they are right. If they bet wrong, the country will be forced to buy many billions more in mortgages and homes than what they are currently looking at.
Posted by: Bob Fox | February 28, 2008 at 07:06 PM
This article is quite silly!
The article states:"The first is a provision to change the bankruptcy law and let judges reduce the amount of principal and interest due on mortgages of those filing for bankruptcy."
Tally ho, I certainly HOPE Bush would object! We have gone off the deep end when judges are allowed to change the terms of civil contracts without statue or case law violations--and just because someone feels the contract is "too difficult' for one of the parties.
Government needs to "back off" and let the market take care of these problems all by itself.
Three cheers for George Bush!
Posted by: David Taylor | February 29, 2008 at 09:21 AM