David Keating of the Club For Growth suggests that “Obama Should Listen to Obama”:
Candidate Barack Obama talked some economic common sense when he debated Hillary Clinton last year.
She called for legislation to rip up mortgage contracts and an interest rate freeze on adjustable mortgages.
I have not signed on to the notion of an interest rates freeze, and the reason is not because we need to protect the banks. The problem is, is that if we have such a freeze, mortgage interest rates will go up across the board and you will have a lot of people who are currently trying to get mortgages who will actually have more of a difficult time.’
But now he proposes to allow “bankruptcy judges [to] modify mortgages written in the past few years.”
Basically this creates a similar problem, and a new risk premium that will be needed by lenders. With this dumb idea, you not only have to worry about whether your borrower will pay off the loan, you have to worry about Congress allowing some judge to modify your contract.
Just what the housing market needs. Another reason for higher mortgages rates.
Meanwhile, Victor Davis Hanson has a few “Perverse Thoughts about this Perverse Recession.”