I just wanted to fill a gap in the coverage of the Obama housing plan that may have confused some people. Part of the plan, as you'll recall, is to help people refinance their mortgages if they owe almost as much or slightly more than the current value of their house--a situation that normally makes it impossible to refinance.
I have to say I found HUD Secretary Shaun Donovan very impressive during the background briefing he and Tim Geithner and FDIC Chairman Sheila Bair gave reporters yesterday. I didn't see it live, but reading over the transcript, it seemed like Donovan had pretty much every detail at his finger tips and was able to relate them with real fluency. (In fairness, Geithner and Bair both more than held their own, but I'd seen them in action before.) For what it's worth, this jibes with what I've heard from multiple White House sources.
There are two key proposals at the center of Obama's housing plan: one for people still making payments; one for people who've stopped making payments or are about to. Obama would help the first group refinance at a lower interest rate. For the second group, he'd give lenders incentives to accept less money each month than they're currently owed. I can think of two plausible objections--one macro, the other micro. But there are reasonable responses to both.
I'm about to scratch out some thoughts on the housing plan itself. In the meantime, lemme say I thought the speech was very solid as rhetoric. Obama managed to boil down a pretty complicated situation.
Greg Sargent has the response from Politico editor John Harris to some of the comments NYT boss Bill Keller made to Gabe Sherman in his recent story for TNR. (Could you fit any more proper nouns in a sentence without a comma? I think not...) The whole statement is kind of interesting, but this line stood out to me: We are not a general-interest site but one focused on an audience that is intensely, even obsessively, interested in subjects we dominate--Congress, the White House, national politics.
One thing struck me as a little goofy from that second FT piece I cited: In early April, big institutions will publish their first-quarter results. If the intervening Treasury stress tests have not by then revealed the true state of their balance sheets, then their first-quarter results may do so. "The first week in April - that's when the children's party is over," says Chris Whalen, co-founder of Institutional Risk Analytics.
The Financial Times has two interesting pieces up about the banking crisis. The first is a write-up of a speech Alan Greenspan gave today. Key point: The US administration will have to go back to Congress for more money to recapitalise the banking system, Alan Greenspan, the former chairman of the Federal Reserve, said on Tuesday. ...
In the last few days, two prominent financial columnists have suggested the reaction to Tim Geithner's speech last Tuesday was unfair. The Times Gretchen Morgenson says President Obama put Geithner in an impossible position with his persistent expectation-raising.
I missed this yesterday: Sen. Arlen Specter (R-PA), who broke with his party to support President Obama's stimulus package last week, said before the final vote Friday that more of his colleagues would have joined were they not afraid of the political consequences.
For those keeping score, the CBO says the final version of the stimulus pays out about 74 percent of its benefits this fiscal year or next, pretty much where Peter Orszag said it would end up. Unfortunately, the $70 billion AMT fix accounts for a big chunk of that percentage. But you've obviously got to blame the GOP for that one, not Orszag. --Noam Scheiber