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Clinton: Not a Government Bailout
Posted by Russell Berman
Mon, 24 Mar 2008 at 12:56 PM
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Four words that are almost certain to be heard in the course of any mainstream Democratic proposal to address the mortgage and credit crisis are: not a government bailout.
That was the line from Senator Clinton and her advisers as she laid out a proposal that could dramatically increase the government's role in trying to prop up the housing market and stave off further waves of foreclosures across the country.
The words serve as a ready rebuttal to the inevitable attacks from small-government Republicans, but it leaves open the question of what exactly is a government bailout in the first place.
Mrs. Clinton called for the federal government to back private sector auctions that would allow to at-risk homeowners to restructure their mortgages and said if that doesn't work, the government should "stand ready" to step in and purchase, restructure, and re-sell the mortgages itself.
She is also proposing a housing stimulus package to the tune of $30 billion that she said would help states and localities acquire foreclosed properties, provide aid to homeowners, and secure neighborhoods in danger of crime increases because of widespread foreclosures and vacancies.
"If the Fed can extend $30 billion to help Bear Stearns address their financial crisis, the federal government can provide at least that much in assistance to help families and communities address theirs," Mrs. Clinton said in what her campaign billed as a "major policy speech" at the University of Pennsylvania.
The proposals she announced this morning are in addition to measures she unveiled in December, including a 90-day moratorium on foreclosures and a five-year freeze on interest rates for subprime mortgages on occupied homes.
"Some may claim that the plan I offered today is a bailout," she added. "They'll argue that it's not the government role to help. Well, that is the same type of tired rhetoric we've been hearing for years now, and I think the American people know better."
The former first lady's economic advisers reiterated that sentiment on a conference call afterward, although they acknowledged that Mrs. Clinton's plans went further than a Democratic proposal being offered by Senator Dodd and Rep. Barney Frank, the chairmen of the congressional committees with jurisdiction over financial institutions.
"This is just too big of a crisis to let ideology or fears of political demagoging keep us from putting all our options on the table," a senior adviser, Gene Sperling, said.
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