John McCain, the Republican’s presidential nominee, on Thursday sought to push back against criticisms of his alleged do-nothing approach to the US housing crisis, unveiling a plan that would provide federal help to “well-meaning” homeowners facing foreclosure.
By Edward Luce and Andrew Ward in Washington
Mr McCain’s plan, which is much closer to the Bush administration’s stance than to those of Hillary Clinton or Barack Obama, marks a change of thinking from his last big speech on the crisis two weeks ago, where he said the taxpayer should not bail out people who had made bad decisions.
Under his proposal, homeowners could apply directly to the federal government to restructure unaffordable loans. “There is nothing more important than keeping alive the American dream to own your home,” said Mr McCain. “Priority number one is to keep well-meaning, deserving homeowners who are facing foreclosure in their homes.”
Both Democratic candidates attacked Mr McCain’s plan as a “half measure” that would exclude most victims of the crisis. Under his proposal only homeowners who were creditworthy when they took out their original loan would be eligible for help – a move, say Democrats, that would exclude victims of predatory lending, who are estimated to make up more than half of the US’s 2.36m mortgage holders in arrears.
Mr Obama and Mrs Clinton both support bills authored by Barney Frank, the Democratic congressman, and Chris Dodd, the Democratic senator, that would enable federal agencies to restructure between $300bn (£152bn) and $400bn in struggling mortgages at a cost of between $10bn and $20bn to the taxpayer – roughly double that of Mr McCain’s plan.
Both also pointed out that in last month’s speech Mr McCain said he opposed aggressive intervention and insisted that he would not “play election-year politics” with the housing crisis. “Better late than never,” said Mr Obama, who nevertheless added that “the American people can’t afford this kind of do-nothing approach”.
Mrs Clinton accused Mr McCain of proposing “a warmed over, half-hearted version of the very plan he criticised [Dodd-Frank]”.
Thursday’s exchanges offered a foretaste of the general election debate between Mr McCain and whoever becomes the Democratic nominee, with the economy and Iraq looking set to dominate.
Mr McCain, who has confessed to knowing little about economics, has also come under fire for suggesting he would reduce the fiscal deficit by extending President George W. Bush’s tax cuts and cutting wasteful spending.
Both arguments closely resemble Mr Bush’s positions. “During the Republican primaries John McCain was the least of the ‘continuity’ candidates,” said Tom Gallagher, head of International Strategy and Research in Washington. “But on the two big issues – Iraq and the economy – he is looking more like continuity than change.”
Carly Fiorina, former chief executive of Hewlett Packard and an adviser to Mr McCain, denied the senator had shifted position.
The Financial Times