On Tuesday, Barack Obama wrote an opinion piece for The Financial Times about the subprime mortgage mess. He characterizes it as a crisis that is just beginning - which is true - and one for which dishonest lenders should be punished. And those who were facing defaulting on their mortgage should be helped, so that they can keep their homes and keep paying their mortgage. It's the boldest statement - and the one most on target - from a presidential candidate on the topic:
The implosion of the subprime lending industry is more than a temporary blip in our economic progress. It is a cancer that, given today's integrated financial markets, threatens to spread with devastating impact to housing and to our economy as a whole, unless we act to contain it.
There is a reason why this has happened. Over the past several years, while predatory lenders were driving low-income families into financial ruin, 10 of the country's largest mortgage lenders were spending more than $185m lobbying Washington to let them get away with it. So if we really want to make sure this never happens again, we need to end the lobbyist-driven politics that made it possible.
The real victims in this crisis are the millions of borrowers who followed the rules, whose only crime was taking out mortgages that lenders told them they could afford. Normally, these borrowers could avoid foreclosure by refinancing their mortgages or selling their homes. The problem today is that they cannot refinance because no one will lend to them, and they cannot sell because the housing market has fallen. With some arguing that the effects of the worst subprime loans will not be felt until 2008 and 2009, this may be just the beginning.
If we are serious about stopping this crisis and preventing much larger turmoil in US housing markets, Washington needs to stop acting like an industry advocate and start acting like a public advocate.
This guy should be President.