Taxpayers, Not Lenders, Would Bear Costs of McCain’s Mortgage Proposal

WASHINGTON — The homeowner assistance plan that Senator John McCain announced without detail in the presidential debate Tuesday night would allow millions of financially stretched Americans to refinance their mortgages with government help, but it would leave taxpayers to cover the losses, rather than the financial institutions that hold the original mortgages.

Mr. McCain said in the debate that the program would be expensive, and on Wednesday his chief economic adviser, Douglas Holtz-Eakin, acknowledged that the liability would be borne directly by taxpayers.

Mr. McCain, who has made cutting government spending a centerpiece of his campaign, justified the costs on Tuesday night by saying that “until we stabilize home values in America, we’re never going to start turning around and creating jobs and fixing our economy.”

As Mr. Holtz-Eakin described it, the proposal would ensure that homeowners got direct and speedier help to stay in their residences before they faced foreclosure, so that Wall Street and financial institutions would not be the only direct beneficiaries of government aid. The new loans would be 30-year mortgages at fixed interest rates of just over 5 percent, he said. The McCain campaign did not make clear what level of financial strain an applicant would have to show to qualify for the program.

The campaign of Mr. McCain’s Democratic rival, Senator Barack Obama, who had previously signaled support for similar approaches, condemned the proposal Wednesday. It said in a statement, “The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud.”

Beyond the costs, the proposal could encounter a backlash from voters, especially those who have had to work hard and sacrifice to keep current on their mortgage payments and who might resent bailing out fellow homeowners who got themselves into financial trouble.

Mr. Holtz-Eakin suggested that “the taxpayers’ contribution” would be the price of getting the quickest possible relief to homeowners and arresting falling home values. Declining home values have led to rising defaults and foreclosures, which in turn have devalued trillions of dollars in housing-related assets for financial institutions and companies in the United States and abroad, threatening the businesses’ survival and fueling a credit freeze that endangers the global economy.

Though Mr. Holtz-Eakin spoke of the urgency for action, he said Mr. McCain did not propose the idea as part of the recent bailout negotiations between Congress and the White House. So it would not begin until after Mr. McCain, if elected, takes office in January and issues an executive order.

The White House and the Treasury Department declined to comment on the McCain proposal, saying they did not have enough information. But they said existing programs were helping homeowners to avert foreclosures.

Mr. Holtz-Eakin noted that about 10 million Americans had mortgages that exceeded their homes’ value. “Literally millions of people” could benefit, he said, adding, “The question is how many people pick up the phone.”

He said the process of applying for a replacement mortgage would be “very simple,” though clearly administering such a program would not be. Under the plan, homeowners could call a mortgage broker or lender to refinance their residences. If they passed a credit check, they would qualify for a Federal Housing Administration loan based on the reduced value of the homes, with lower principal and a lower interest rate.

The government would pay off the original loan, Mr. Holtz-Eakin said. That would take the bad debt off the books of the institutions that made the original loans, or in the case of loans that were sold and repackaged as mortgage-backed securities, it would prevent further deterioration of their value.

Assuming the homeowners ultimately paid off the new mortgages, the taxpayers’ liability would be the difference between those mortgages and the original, more costly mortgages, Mr. Holtz-Eakin said.

Mr. Holtz-Eakin corrected one detail from the brief outline that the campaign issued Tuesday night after the debate. That outline said the plan would cost roughly $300 billion, which, it said, could be drawn from the $700 billion provided in the financial rescue package that became law last week.

But Mr. Holtz-Eakin said the financing could come from “several pots of money”: the bailout money, the F.H.A.’s separate authority to refinance up to $300 billion in mortgages, or the mortgage-finance companies Fannie Mae and Freddie Mac, which the government now owns.

Love your way... you are Brilliant!

Alan Davidson is the author of the Free report

"Body Breakthroughs for Life Breakthroughs: How to Peak Your

Physical, Emotional, Mental, Moral, and Spiritual IQs for a

Sensational Life"

available at www.throughyourbody.com

Alan is also the author of Body Brilliance:

Mastering Your Five Vital Intelligences (IQs)

http://bodybrilliancebook.com/bbb_movie/

Watch the Body Brilliance Movie

www.ThroughYourBody.com

Poll Finds Obama Gaining Support and McCain Weakened in Bailout Crisis

With the first presidential debate completed and both candidates grappling with the turmoil on Wall Street and in Washington, Senator Barack Obama is showing signs of gaining significant support among voters with less than five weeks left until Election Day, while Senator John McCain’s image has been damaged by his response to the financial crisis

A CBS News poll released Wednesday found that Mr. Obama’s favorability rating, at 48 percent, is the highest it has ever been in polls conducted by CBS and The New York Times. At the same time, the number of voters who hold an unfavorable view of Mr. McCain — 42 percent — is as high as it has been since CBS News and The Times began asking the question about Mr. McCain in 1999, the first time he ran for president.

The CBS News poll showed that Mr. Obama had a nine-percentage-point lead over Mr. McCain — 49 percent to 40 percent. It is the first time Mr. Obama has held a statistically significant lead over Mr. McCain this year in polls conducted by CBS or joint polls by CBS and The Times. And a series of polls taken in highly contested states released by other organizations on Tuesday suggested that Mr. Obama was building leads in states including Florida, Pennsylvania and Virginia.

The CBS News poll found that President Bush had tied the presidential record for a low approval rating — 22 percent, matching Harry S. Truman’s Gallup approval rating in 1952, when the country was mired in the Korean War and struggling with a stagnant economy. That finding put a new premium on Mr. McCain’s effort to distance himself from Mr. Bush, and suggests that Mr. Bush will continue to be a prominent figure in the Obama campaign’s advertisements attacking Mr. McCain.

The contest between Mr. McCain and Mr. Obama is far from over. It is being fought against the continued uncertainty over the turmoil on Wall Street and in the bailout negotiations in Washington. There are three potential turning points ahead — a vice-presidential debate on Thursday night and two more debates between Mr. McCain and Mr. Obama — and this election has regularly been shaken up by outside events that have tested both candidates and altered voters’ views.

Still, the trends signaled by this new wave of polls — coming at what both sides view as a critical moment in the contest — suggest that the contours of this race are taking form, and in a way that is not encouraging for Mr. McCain’s prospects.

The election cycle is entering a time when voters historically begin to make final judgments; this year, in fact, many of them are actually beginning early voting in states. What is more, the poll suggests voters have been guided by how Mr. McCain and Mr. Obama did in their debate last Friday, and also how they have responded to the crisis on Wall Street and the resulting deadlock in Washington about how to respond to it.

In the CBS News poll, 54 percent of respondents said Mr. Obama had a plan for dealing with the economic crisis, compared with 48 percent who said Mr. McCain did. And 47 percent of respondents said they disapproved of the way Mr. McCain was handling the current economic crisis, compared with 33 percent who approved and 20 percent who said they had no opinion. For Mr. Obama, 32 percent of respondents said they disapproved of his response, compared with 43 percent of respondents who approved; the rest had no opinion.

And two-thirds of respondents said the highest-profile action Mr. McCain has made in response to the crisis — announcing that he was suspending his campaign to return to Washington and help negotiators strike a deal — had made no difference in the outcome of the talks.

The CBS News poll suggested one sharp contrast in the view of voters of Mr. Obama and Mr. McCain that might have been fed by the different ways the two men responded to the crisis. Forty-five percent said Mr. McCain acted too quickly when he made a decision, compared with 29 percent who said he did not act quickly enough. For Mr. Obama, 23 percent said he acted too quickly, compared with 41 percent who said he did not act quickly enough.

The national poll findings by CBS News were echoed in polls released Tuesday by Time magazine and the Pew Research Center. Perhaps more problematic for Mr. McCain were polls, also taken after the debate and in the midst of the financial crisis, suggesting problems for him in critical states, including Florida and Ohio, which President Bush won in 2004 and which Mr. McCain had been confident of holding, and Pennsylvania, a state that Democrats won last time and that Mr. McCain has put on the top of the list of states he has been trying to win. Complete results for all the polls are at nytimes.com/politics.

Polls by Quinnipiac University, taken Saturday through Monday, showed Mr. Obama ahead in Florida, Ohio and Pennsylvania. The Time/CNN battleground polls also showed Mr. Obama with a lead in Minnesota and Virginia, a state that has been on the top of the pickup lists for Mr. Obama.

The CBS News national survey suggested a toxic atmosphere for incumbents in general, but particularly for Republicans. The approval rating for Congress is down to 15 percent, another historic low for the Times/CBS News poll.

The CBS News poll found economic anxiety among Americans as high as it has ever been in the history of the poll. Nine in 10 Americans said the economy was in very bad or fairly bad shape, the highest measure on that score since The Times and CBS News began asking the question in September 1986. (The percentage who said that the economy was in very good shape was less than 1 percent.) And the number of Americans who thought the economy was getting worse, 76 percent, set another record: the gloomiest Americans have been since the question was first asked in April 1974.

The CBS News poll, of 1,257 adults, including 1,113 registered voters, was conducted Saturday through Tuesday and had a margin of sampling error of plus or minus three percentage points.

The polling comes on the eve of the vice-presidential debate between Gov. Sarah Palin of Alaska, a Republican, and Senator Joseph R. Biden Jr., Democrat of Delaware, and provides new evidence that Ms. Palin’s standing among voters has declined since Mr. McCain chose her as his running mate in August.

The Pew poll found that 51 percent of respondents said she was not qualified to be president, compared with 37 percent who said she was. That is a reversal from early last month, when 52 percent of respondents said Ms. Palin was qualified to be president.

McCain's Firebrand Style vs. Obama's Cerebral Style

It was classic John McCain and classic Barack Obama who grappled with the $700 billion bailout plan over the last week: Mr. McCain was by turns action-oriented and impulsive as he dive-bombed targets, while Mr. Obama was measured and cerebral and inclined to work the phones behind the scenes.

Mr. McCain, who came of age in a chain-of-command culture, showed once again that he believes that individual leaders can play a catalytic role and should use the bully pulpit to push politicians. Mr. Obama, who came of age as a community organizer, showed once again that he believes several minds are better than one, and that, for all of his oratorical skill, he is wary of too much showmanship.

For Republicans, Mr. McCain’s performance proved mixed, however. His quick call to fire the chairman of the Securities and Exchange Commission, then his decision to suspend his campaign and return to Washington even though he lacked an alternative to the bailout, risked making him look impetuous in a moment of crisis. He comes out of this without an easily definable role or set of obvious results, though his top advisers said he had bought time for House Republicans to raise their own concerns.

On Capitol Hill, Representative John A. Boehner of Ohio, the House minority leader, said that Mr. McCain’s support had been critical to bringing the Republicans into the negotiations. Mr. Boehner said that without him, “They would have run over me like a freight train.”

For Democrats, the episode was one more reminder that Mr. Obama was more analyzer-in-chief than firebrand — though in this case, they gave him high marks for his style. Still, given concerns among Americans about the economy, Mr. Obama risked seeming too cool and slow to exert leadership.

Aides and political allies to both men agreed Sunday that perhaps no episode thus far in the campaign better demonstrated how they would approach managing problems as president. Their instincts, temperaments, and leadership traits were in the spotlight in Washington, as well as their limitations and foibles — characteristics that also showed through stylistically in Friday night’s debate.

Both candidates said on Sunday that they were inclined to vote for the bailout even though they were not completely happy with it. McCain advisers also began making the case that Mr. McCain had emerged as an important ally for House Republicans, while Mr. Obama criticized Mr. McCain for initially showing a “Katrina-like response” to the economic crisis when he said that “the fundamentals of the economy are strong.”

As Mr. McCain appeared as a man in motion last week, Mr. Obama’s cautious side was on clear display. He loathes gambits as too unpredictable, which is why, aides say, he would have never suspended his presidential campaign like Mr. McCain did on Wednesday to join in the bailout negotiations in Washington.

Mr. McCain, meanwhile, thrives in the fray, which accounts for his lead role in the Gang of 14 talks on judicial nominations and in legislative wrangling over campaign finance reform and immigration. Yet Republicans acknowledge that no McCain imprint appears to be on the final bailout package moving through Congress, and some of them were trying Sunday to put the best face on his role by casting him as a man of action.

“By halting his campaign, he magnified just how important this bailout was to the nation, and showed that he would approach a crisis by locking everyone in a room and keeping them there until they had a solution,” said Anthony V. Carbonetti, a Republican political adviser to former Mayor Rudolph W. Giuliani of New York.

“And with Obama, you saw a kind of laissez-faire attitude — ‘you guys know it’s important, deal with it,’ ” Mr. Carbonetti added.

Yet many Democrats — even some who have been critical of Mr. Obama in the past — said they were impressed with his performance over the last week, and described Mr. McCain as substituting theatrics for leadership. Mr. Obama consulted with Bush administration officials and Congressional Democrats, emphasized his priorities for the bailout, and told both sides that he was willing to do whatever would be most helpful to reach a bipartisan bailout agreement.

“Obama’s approach to this has been very Obama — measured, cool and thoughtful, which I hope is what the country wants more than theatrical anger,” said Gov. Edward G. Rendell of Pennsylvania, a Democrat who had supported Senator Hillary Rodham Clinton’s presidential candidacy.

“The more yelling and screaming you do, you get accused of grandstanding,” Mr. Rendell said. “Personally, I thought McCain looked bizarre when he came out of the box saying he wanted to fire the chairman of the Securities and Exchange Commission.”

Indeed, Mr. McCain’s early call to replace Christopher Cox, the S.E.C. chairman, drew scathing reviews from some conservatives as brash and wrong-headed. He drew fire on Wednesday from one high-profile friend, David Letterman, for canceling a guest spot on Mr. Letterman’s show that night because he had to rush to Washington — even though Mr. McCain stayed in New York until Thursday for other media and public events.

If Mr. McCain’s moves were attention-grabbing, they also invited mockery: On “Saturday Night Live” this weekend, an actor portraying Mr. McCain proposed to Mr. Obama that they both suspend their campaigns and instead hold a series of pie-eating contests instead of debates.

“It’s what, in my campaign, we call a stunt or a gimmick — something to shake up the race,” the McCain character said.

Yet for Mr. McCain, a theatrical move in the short term has often proved to be the preferable strategy, even if the likely results were far from clear.

He surprised many in August by choosing Gov. Sarah Palin of Alaska as his running mate — a move that delighted conservatives at the Republican convention the next week but has raised concerns more recently as Ms. Palin has struggled to explain basic foreign policy views. Earlier that month, too, Mr. McCain sent envoys to Georgia to examine that nation’s conflict with Russia — a grand act that appeared to do nothing to affect the military action except to give Mr. McCain a platform on it.

Mr. McCain’s pronouncements on Georgia that week were in sharp contrast to Mr. Obama’s choice to monitor the Georgian-Russian hostilities from his Hawaiian vacation spot. Neither Democrats nor Obama aides expressed concern that Mr. Obama appeared remote from the conflict; they simply said there was little concrete he could do to make a difference.

Likewise, in their debate on Friday night, Mr. Obama chose at several points to express agreement with Mr. McCain on national security threats overseas, instead of counterpunching.

Mr. Obama does not tend to take fiery or partisan swipes just for the sake of them. Yet it is unclear if this more serene style will ultimately excite or win over voters in swing states.

Voters list the economy as a priority, and Mr. Obama’s placid public approach may not mesh with the anger that many of them feel. But Democrats say that in the long run, Mr. Obama’s approach will appear as an appealing alternative to President Bush and his choice as a successor, Mr. McCain.

“After eight years of Bush’s cavalier attitude toward serious and complex problems, people are in the market for a more thoughtful approach,” said Doug Hattaway, a Democratic communications consultant who was a spokesman on Senator Clinton’s campaign. “That’s usually dangerous for a politician trying to get elected in a ‘just do it’ culture. But the time seems to be right for Obama’s more cerebral style.”

Love your way... you are Brilliant!

Alan Davidson is the author of the Free report

"Body Breakthroughs for Life Breakthroughs: How to Peak Your Physical, Emotional, Mental, Moral, and Spiritual IQs for a Sensational Life"

available at www.throughyourbody.com

Alan is also the author of Body Brilliance:

Mastering Your Five Vital Intelligences (IQs)

http://bodybrilliancebook.com/bbb_movie/

Watch the Body Brilliance Movie

www.ThroughYourBody.com

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