The Corner

Saving the Loans

The Obama loan-modification package is well-designed, and it makes sense to use Fannie Mae and Freddie Mac as the central players. They both have the expertise and staffing to handle a lot of the details, and they already own a large proportion of the mortgages and MBS that have to be refinanced. This principally includes the 10 million subprime and alt-A mortgages they hold or have guaranteed.

However, the program is ill-conceived if it is intended to renegotiate the 6 million mortgages the administration has suggested it will be necessary to address. There is very little chance that this can be done in the time required to prevent the gradual deteroration of both bank assets and the economy generally. What was necessary was a program that treated the problem on a wholesale rather than a retail basis. This could have been done by acquiring the loans at a discount from the banks (relieving the banks of the cost of foreclosure) and passing the discount (together with a lower interest rate) along to homeowners in the form of a reduction in mortgage principal. No time-consuming negotiation would have been required, and the homeowners would have had much lower monthly payments. In short, it’s a well-intended plan, but will fall short of a solution.

– Peter J. Wallison is the Arthur F. Burns fellow in financial-policy studies at the American Enterprise Institute.

Most Popular

Politics & Policy

Broward’s Cowards

It is impossible to imagine circumstances under which Broward County sheriff Scott Israel could attempt to perform his duties with the confidence of the public. He should resign immediately, and if, as he promises, he refuses to go quietly, then he should be shown the door by the people he professes to ... Read More
Culture

Courage: The Greatest of Virtues

EDITOR’S NOTE: The following is Jonah Goldberg’s weekly “news”letter, the G-File. Subscribe here to get the G-File delivered to your inbox on Fridays. Dear Reader (Or Listener), As the reporter assigned the job of writing the article about all of Sidney Blumenthal’s friends and supporters told his ... Read More
Immigration

My American Dream

This morning, at 8 a.m., I did something I’ve wanted to do for as long as I can remember: I became an American. I first applied for a visa in early 2011, and since then I have slowly worked my way through the system — first as a visa-holder, then as a permanent resident (green card), and, finally, as a ... Read More
Politics & Policy

CNN’s Shameful Town Hall

CNN recently hosted an anti-gun town hall featuring a number of grieving children and parents from Stoneman Douglas High School in Parkland, Fla., who aimed their ire at the National Rifle Association, politicians peripherally associated with the NRA, and anyone who didn’t say exactly what they wanted to hear. ... Read More
U.S.

The Gun-Control Debate Could Break America

Last night, the nation witnessed what looked a lot like an extended version of the famous “two minutes hate” from George Orwell’s novel 1984. During a CNN town hall on gun control, a furious crowd of Americans jeered at two conservatives, Marco Rubio and Dana Loesch, who stood in defense of the Second ... Read More