Republican Senate nominee Mike Johanns on Monday suggested a limited federal mortgage subsidy for troubled homebuyers as an alternative to the failed $700 billion financial sector rescue plan.
DON WALTON / Lincoln Journal Star | Posted: Monday, September 29, 2008 7:00 pm
Republican Senate nominee Mike Johanns on Monday suggested a limited federal mortgage subsidy for troubled homebuyers as an alternative to the failed $700 billion financial sector rescue plan.
Johanns said his proposal would not forgive mortgage debt but would “buy down” expensive interest rates to give homebuyers some time to meet their financial obligations.
Although he attached no cost estimate to his plan, Johanns said it would be far less expensive than the proposal rejected by the House earlier in the day.
Republican Reps. Jeff Fortenberry, Lee Terry and Adrian Smith joined the House majority in voting to scuttle the rescue plan proposed by the Bush administration and revised by the congressional leadership.
Republican Sen. Chuck Hagel said he would have voted for that proposal had it reached the Senate because it would help restore confidence in financial markets and unlock credit and liquidity.
Democratic Sen. Ben Nelson abruptly canceled a scheduled afternoon conference call about the nation’s financial crisis.
“Yes, this proposal was far from ideal,” Democratic Senate nominee Scott Kleeb said.
“But that’s no excuse for inaction.
“No solutions, no answers, just ‘no.’ That’s not the kind of leadership Nebraskans deserve.”
Johanns said the administration’s proposal, in effect, would transfer risk of loss from the private sector to “the shoulders of the taxpayer.”
“Once you mess with that very important element in the decision-making process, you create a whole different economic dynamic,” he said.
If the private financial sector is to be rescued by taxpayer funds now, Johanns said, the question becomes: “What’s the next bailout?”
Among Johanns’ list of concerns about the costly rescue plan was lack of any guarantee that the proposal actually would increase liquidity in the lending sector.
Fortenberry said there may be less costly and more effective alternatives to “foot(ing) the bill for the financial industrialists of Wall Street who created this problem for Main Street.”
Smith said that “nationalizing every bad mortgage in America —in what some have called the largest corporate bailout in American history — is not the answer.”
Terry said he will look to other options, including the private market.
Reach Don Walton at 473-7248 or dwalton@journalstar.com.