Obama the Madman: Ordering Banks to Slash Mortgages

Tell me, if banks are ordered to slash, or altogether eliminate, mortgage payments, how on earth is anyone supposed to get a mortgage in America anymore? He’s a madman.

The Washington Post: Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be their unemployment insurance, for up to six months. In some cases, administration officials said, a lender could allow a borrower to make no payments at all.

The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment. While the initial mortgage crisis that erupted three years ago resulted from millions of risky home loans that went bad, more recent defaults reflect the country’s economic downturn and the inability of jobless borrowers to keep paying.

The administration’s newest push also seek to more aggressively help borrowers who owe more on their mortgages than their properties are worth, by encouraging lenders to cut the loan balances of millions of these distressed homeowners and possibly refinance into loans backed by the Federal Housing Administration. The problem of so-called “underwater” borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged.

For the first time, the government will offer financial incentives to lenders that cut the principal these homeowners owe on primary mortgages.

Well, he can’t have any more Obamavilles pop up, or foreclosure related suicides, now can he? Of course not. That would create an image of a failed presidency. It’s the same thinking that was behind food stamps. Politicians don’t want images of millions of people standing in line for bread and cheese.

During the Great Depression of the 1930s the country faced the sight of their fellow Americans waiting in lines for soup and bread. The soup lines became ingrained in the country’s consciousness as a failure on the part of the nation to provide jobs for an out of work populace, images that are still recognizable today. We now have a record 40 million Americans on food stamps, an amazing 25% more than the year before.

However, in the modern era we no longer see images of Americans unable to feed themselves. Thanks to technology food stamp cards are reloaded automatically and accepted at most grocery stores. The liberal elite are spared the horrifying sight of millions upon millions of people…in every neighborhood, in every community…waiting in line for food.

And yet watching Obama speak you’d never suspect he cared. When choosing a metric to measure the success of a President, I suggest food stamps. If a President can’t provide an economic environment in which people can feed themselves, then what good is he? By this account, Obama is the biggest presidential failure in the history of the United States.

Getting back to the mortgage story.

The new initiatives are expected to take effect over the next half year and will be funded out of money remaining in the $700 billion bailout program for the financial sector, administration officials said. They said no new taxpayer funds would be needed.

Is that supposed to make us feel better? The TARP funds were supposed to be repaid to the Treasury with interest. That was the deal. The taxpayer was supposed to see a profit from that. Obama and Congress just raised the debt ceiling to an unthinkable $14 TRILLION!

But yeah, we’re crazy for calling him a commie. At least we aren’t the only ones who see it. The rest of the world sees it, and they’re chomping at the bit to see who will fill the vacuum once America’s no longer the great superpower.

Update: Megan McCardle breaks down why this mortgage plan probably won’t help the hardest hit areas. (Via memeorandum)

The Atlantic Wire linked.