Senators disown McCain mortgage plan

So whose mortgage plan is it?

After Sen. John McCain detailed for a national audience Tuesday “my proposal” to have the government buy out bad mortgages, his presidential campaign Thursday said he was actually following in the footsteps of proposals by Sen. Hillary Rodham Clinton and others.

Mrs. Clinton’s office called that claim “offensive,” and said her proposal, which she detailed last month on the Senate floor, was different.

And Sen. Barack Obama, the Democratic presidential nominee who on Tuesday claimed Mr. McCain’s plan was a rehash of an Obama plan, by Thursday was blasting the proposal as a sop to banks and a bad deal for taxpayers.

Welcome to a presidential campaign dominated by senators seeking to manage a Wall Street crisis that is confounding Washington policymakers.

Dubbed the McCain Resurgence Plan, the Republican presidential nominee proposed during Tuesday’s debate using hundreds of billions of dollars in government spending authority to buy up existing failing mortgages and reissue them at their lower current market value and at a manageable interest rate.

But the McCain campaign says the money would come out of the $700 billion Wall Street bailout package Congress passed last week, and said there’s a chance stabilizing home prices could actually bring down the cost of the bailout.

“Senator Obama was happy to bail out Bear Stearns, AIG, Fannie Mae, Freddie Mac … but he’s opposed to us helping the homeowners of America. Do you want to help the homeowners of America, or did you want to help Wall Street?” Mr. McCain said at a town-hall meeting in Wisconsin on Thursday.

However, Democrats said Mr. McCain’s proposal would leave taxpayers on the hook for the drop in home value on those bad mortgages, without making banks take a hit for having issued an overextended mortgage in the first place.

“Senator McCain actually wants the government to pay the full face value of mortgages on the books, even though they’re not worth that much anymore, so banks wouldn’t take a loss,” Mr. Obama said Thursday. “But taxpayers would take a loss. It’s a plan that would guarantee that you, the American taxpayers, would lose.”

After Tuesday’s debate though, Mr. Obama’s campaign had said the plan wasn’t new and, in fact, claimed Mr. Obama had proposed something similar weeks earlier. The McCain campaign said the charge is disingenuous.

“The night of the debate he thought this was a great idea. Why does he switch? Strictly political ambition,” McCain domestic policy adviser Douglas Holtz-Eakin told MSNBC.

Part of the problem was the McCain campaign issued an incorrect fact sheet the night of the debate that said financial institutions would take a hit in the new plan. Mr. McCain did not mention that in his own public pronouncement, and by Wednesday his campaign said the fact sheet was in error.

Mr. McCain also didn’t mention Mrs. Clinton or any other author in Tuesday’s debate, and in fact seemed to rule out co-authors.

“It’s my proposal, it’s not Senator Obama’s proposal, it’s not President Bush’s proposal,” he said.

Story Continues →