The McCain boostering Wall Street Journal had this to say about it:
Home prices are likely to keep falling despite the McCain plan if the economy goes into recession, so the best defense against that is to unfreeze the credit markets more quickly via capital infusions from the Paulson facility. And unlike the Paulson plan, the McCain proposal appears to offer no upside for taxpayers. They take all the losses up front and don’t participate in any rebound in house prices, so borrowers who overextended and lenders who made reckless loans are made whole, and taxpayers get the bill. At least the $300 billion FHA program imposes at least a 10% haircut on lenders.
And the Washington Post comes to a similar conclusion:
The McCain plan raises the serious concerns that plague all such ideas: It would benefit borrowers and lenders who made bad decisions and, at least as Mr. Holtz-Eakin (McCain’s economic advisor) described it, it lacks a clear mechanism for reassembling and extricating whole mortgages from the welter of securities “tranches” into which Wall Street slices and dices them. It would also be very expensive, since Mr. McCain proposes to pay face value for the loans. This is in contrast to an already-existing federal plan, Hope for Homeowners, enacted in July and effective since Oct. 1, that will purchase troubled loans. This program pays less than face value, and it calls on both lenders and borrowers to make concessions to the government.
Now personally I think the Government should be looking at all options to fight the economic crisis. I also like the idea of assisting struggling homeowners as the FHA program would do. But McCain’s latest out-of-the-dark and contradictory proposal, as with so much he does and says, represents what is most troubling about the man’s character and judgment. He seems to think his saying something matters more than the actual substance behind it. He figures everyday folks won’t check the detail so who really cares whether the proposal sucks or not. So much for a steady hand on the tiller.
For such a political veteran it all comes off as Bush-league (no pun intended), back-of-the envelope type policy making when what is needed now is thoughtful and prudent leadership. He says that is what he offers but then does everything he can to disprove it. He lurches not only from position to position but from persona to persona. You can blame his campaign for not having a narrative or strategy, but I think it all comes down to who McCain is. And the fact is, he really doesn’t know anymore – as winning has become everything.
