First student loans, now mortgages. Â Obama plans to use taxpayer moneyÂ to bribeÂ struggling homeowners with the promise of being able to keep their homes with government help. Â His agenda echos historical predecessors who enticed citizens into more dependency on a benevolent dictator.
Obama knows such a program is unsustainable, and he’s not interested in changing his destructive economic policies so that homeowners can find jobs to cover their bills.
He is deliberately implementing theÂ Cloward-Piven strategyÂ he learned asÂ a â€œcommunity organizerâ€ forÂ ACORN:Â hasten the fall of capitalism by recruiting so many people into government entitlement programs that the overloaded welfare state collapses under a flood of impossible demands, thus creating a societal crisis whichÂ opens the door for a socialist revolution.
This could be just the beginning. If President Barack Obamaâ€™sÂ legally dodgy appointment of Richard CordrayÂ to head the consumer finance agency should stick, it may open the door to more such actions. Hereâ€™s Jaret Seiberg of the Washington Research Group:
To us, the most important takeaway from a recess appointment of Cordray is that the President could use this same maneuver to put a housing advocate in charge of FHFA.
And why is that important? TheÂ Federal Housing Finance AgencyÂ is theÂ regulator and conservator of Fannie Mae and Freddie Mac. And the FHFA currently has an acting director, Edward DeMarco. If Obama replaces him with a â€œhousing advocateâ€ via the same recess appointment process, hereâ€™s what might happen next, according to Seiberg:
That could lead to a mass refinancing program for agency-backed mortgages that would go well beyond the existing HARP program.Â That could hurt agency MBS pricing and result in higher financing costs going forward. Yet it also could be a big boost for the economy and housing going into the election.
Indeed, my sources tell me the Obama administration has been eager to implement just such a plan, but needs to have its own man heading the FHFA to make it happen.Â The plan would be modeled after one originally devised by Columbia University economists Glenn Hubbard (a campaign adviser to Mitt Romney and AEI visiting scholar) and Christopher Mayer.Â In recent congressional testimony,Â Mayer described how the mass refinancing plan would work:
Under our plan, every homeowner with a GSE mortgage can refinance his or her mortgage with a new mortgage at a current fixed of 4.20 percent or less. â€¦ To qualify, the homeowner must be current on his or her mortgage or become so for at least three months. â€¦ Other than being current, we would impose no other qualification or application, except for the intention to accept the new rate (that is, no appraisal, no income verification, no tax returns, etc.).
Mayer estimates that some $3.7 trillion of mortgages would be refinanced.Â Thatâ€™s right, this would be the Mother of All Mortgage Refinancing Plans. It would help roughly 30 million borrowers save $75 billion to $80 billion a year. As Mayer puts it: â€œThisÂ planÂ wouldÂ functionÂ likeÂ aÂ long-ÂlastingÂ taxÂ cutÂ forÂ theseÂ 25Â orÂ 30Â millionÂ AmericanÂ families.â€
Bottom line:Â Talk about a political and economic game changer in this presidential election year. Obama could offer a trillion-dollar stimulus â€” as measured over a decade â€“that would directly and immediately impact tens of millions of Americans suffering from the housing depression. Cash in their pockets. Imagine the electoral impact on key states, such as Florida, suffering from both high unemployment and devastated housing markets.
And the beauty part for Obama? He wouldnâ€™t need approval from Congress to do it. Even though many Republicans would scream that the plan would reward irresponsible homeowners who took on too much leverage â€” indeed, talk of a housing bailoutÂ is what launched the Tea Party movementÂ â€“Â they probably couldnâ€™t stop it. And Hubbard already has an answer to the moral hazard issue: â€œThis proposal requires borrowers to give up a share of future appreciation in order to participate. Lenders must eat a portion of the losses as well. Everyone gives a little bit.â€
The 2012 battle for the White House is looking razor close. A mass refinancing plan might be enough to tip it to Obama.
Let’s hope this brazen act of trying to outright buy an election doesn’t fly.