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Now the Obama Administration turns its attention to the housing market. Barack Obama traveled to Phoenix to unveil his $275bn plan to protect an estimated 8m homes from looming foreclosure. The press corps joined his entourage and all three newscasts led with a summary of the President's speech from their White House correspondents followed by a trio of reaction pieces, making it the Story of the Day. ABC anchor Charles Gibson continues to take time off work this week. This time his substitute was George Stephanopoulos.

"The basic goal of the plan is to help homeowners who owe more than their house is worth, who need to refinance but cannot get a new loan," was how NBC's Chuck Todd explained Obama's concept. The President divided those so-called underwater homeowners into two groups: those with good credit; and those with "high debt who need a little help." The President proposes that FannieMae and FreddieMac extend a new low interest loan with no downpayment to the creditworthy group; he wants the Treasury Department's TARP fund to extend $200bn to Fannie and Freddie to allow them to keep those rates low. For the latter debtladen group he proposes a $75bn TARP subsidy to encourage banks to offer them a break. ABC's Jake Tapper reported that his sources--identified as unnamed "senior administration officials"--claim that the President needs no legislation from Congress to enact this plan though "they are pursuing legislation that allow bankruptcy judges to reduce mortgages."

On CBS, Chip Reid quoted Harvard University economist Nicolas Retsinas' skepticism that preventing foreclosures alone will do the trick: "You can modify all the loans you want…but if you do not have money coming in through some weekly paycheck, you cannot pay anything." ABC's Jeffrey Kofman, too, found reason for skepticism since the bailout was trying to turn around "an $11tr housing market." CBS' Anthony Mason estimated that more than 6m homeowners owe in excess of 110% of the market value of their homes, some owing as much as 140%. He warned that Obama's plan "will not close the door on the housing crisis" yet, hoping that prices will stop falling "by next year maybe."

In his speech the President promised that his plan would not be used "to reward folks who bought homes they knew from the beginning they would not be able to afford." NBC's Mike Taibbi introduced us to a case in point. Maelynn deLayle (?sp), a young widow in Merrick NY, knew that they had bought "too much house" in 2003 even before her husband died of cancer. To start with, they paid an interest-only loan but now she faces a 40% increase in monthly payments. "She cannot sell, cannot stay, cannot sleep through the night."


Andrew Tyndall 2/19/09 10:56:47 pm

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