Obama's Housing Plan is Insufficient and Short Sighted

Many are hopeful that the new homeowner bailout plan will help to alleviate the pressure currently enveloping homeowners and the housing market. President Obama’s three part plan of changing lending rules to help millions of homeowners refinance, providing $75 billion to help millions of the most at risk for foreclosure, and giving $200 billion to mortgage giants Freddie Mac and Fannie Mae to help keep mortgage rates low is the most aggressive proposal yet to help with the housing crisis. The purpose of the plan is to help provide millions of homeowners that have come to the point of financial ruin a chance to rebuild. The plan will be most effective in states such as Arizona, Florida, Colorado, and California, all of which have been hit hard by the housing crisis. The strategy is to hopefully have a plan that will start working as quickly as possible in order to reach those in the most need as soon as possible. The administration feels that the sooner those on the bottom receive help the better for the long term of the housing market. Meant to immediately help around nine million home owners, the plan is also meant to target those on the verge of falling into the red zone. Sheila Blair, head of the Federal Deposit Insurance Corporation, feels as though the effects of this plan could start showing as early as next month,

“I believe you'll start seeing a real impact in March, with meaningful, long term, sustainable modifications," Bair told ABC

However, is this plan, so lauded by man in the Democratic Party, even original?

The plan which Obama is proposing has drawn comparisons by many to a plan which was developed by John McCain during the Presidential race. Obama’s plan is meant to stop foreclosures before they have a chance to occur, an idea which can even be as much as pinpointed as to when exactly it was first introduced by John McCain, the second presidential debate. During the campaign Obama stated

“Taxpayers shouldn't be asked to pick up the tab for the very folks who helped create this crisis. And that's the problem with Senator McCain's risky idea."

Obama also stated that the plan from Senator McCain, which was estimated to cost around $300 billion, would be too expensive. Yet the plan now being introduced by President Obama is going to bailout those that created the crisis, cost $275 billion, and be paid for by who else than the American taxpayer. Instead of coming up with a new solution for a problem so plaguing the American economy as many believed Obama would do, and as Obama led the American public to believe he would do, the Obama administration simply made minor adjustments to a plan that was already introduced during the campaign. Another disappointment from the Obama camp in what is still the infancy stage of his presidency. Still, this issue of originality over the housing bailout plan is minor to the major issues I see with the bill. This plan appears to me to be an effort to provide an easy way out for those that made irresponsible and knowingly reckless purchases of homes that they were aware they would never be able to afford.

The American taxpayers are paying people and banks to do that which they were already supposed to be doing.

“President Obama’s massive mortgage-bailout plan is nothing more than a thinly disguised entitlement program that redistributes income from the responsible 92 percent of home-owning mortgage holders who pay their bills on time to the irresponsible defaulters who bought more than they could ever afford. This is Obama’s spread-the-wealth program in action.”, Larry Kudlow National Review Online

The $275 billion dollar plan is simply creating further debt on a quick fix for the housing crisis. While expanding the control and power of major mortgage owners Fannie Mae and Freddie Mac, the Obama plan does nothing to alleviate the pressure on small-time mortgage lenders or Wall Street. Instead of throwing money at those that made irresponsible decisions to purchase homes well out of their means bracket, Obama and his administration should do as much as possible to support new families looking to buy starter homes. After all in a free-market society that is how economic problems are fixed, by supporting an ever growing number of new that wish to buy into the system. Not by using big government to bail out the few at the cost of many. After all it is important to realize that while the prices of homes continue to drop, the number of those buying homes is continuing to rise. Have some faith in the free market system, President Obama, and try to develop some long term solutions for the issues at hand instead of quick, draining, and short-term solutions for problems that are of far greater reach. Deal with the loans that were issued as securities and help out all mortgage writers, not just the two major mortgage brokers that the government can control. Spark the economy, do not continue to impede its growth.