Romney’s “New” Housing Policy Is Incredibly Lame

Commentary about business and finance.
Sept. 24 2012 3:59 PM

Mitt Romney’s Lame New Housing Policy

Obama’s housing policy has failed, but Romney offers a big pile of nothing to replace it.

A forcelosed home.
A "for sale" sign on a foreclosed house in Glendale, Calif.

Photograph by Kevork Djansezian/Getty Images.

Mitt Romney’s presidential campaign made the odd decision to release a new policy document about housing issues last Friday in the late afternoon. The Friday afternoon “news dump” is when you put things out that you think will reflect poorly on you, knowing that reporters will give them scant attention. The housing paper was doubly-obscured, first by the weekend and second by release of Romney’s tax documents the same day.

Burying housing policy was a strange choice for the Romney campaign, because housing policy (foreclosures, mortgage disasters, etc.) has been a giant failure for the Obama administration, and one where Romney could easily score substantive points.

Having spent my weekend perusing the Romney position paper, I’m prepared to offer an explanation for why they buried it: It sucks.

Faced with the opportunity to take a nice big swing at the piñata of Obama-era foreclosures, Romney whiffed, offering a “plan” chock of platitudes, bromides, and non sequiturs. Why the campaign preferred dumping it out when they thought nobody would notice to simply not releasing it is a mystery. But perhaps the greater mystery is why they couldn’t stir themselves to write a policy that made sense.

The context here is the epic failure of the Obama administration to do anything of sufficient scale to address the foreclosures roiling the nation. Foreclosures aren’t just unpleasant to the families that experience them, but also have significant knock-on consequences for the rest of the community and consequently constitute secondary shocks to a country already devastated by a severe recession.

In 2009, when the administration was at the peak of its powers—Fannie Mae and Freddie Mac nationalized by the federal government, banks desperately in need of federal money, the president popular and backed by large congressional majorities—President Obama didn’t think addressing the issue was important. His primary premise was the not-unreasonable one that the best solution to housing pain was overall economic recovery. A secondary, less-reasonable premise was that restoring the “confidence” of the banking sector was a key element of broad economic recovery. So at the margin the administration wasn’t interest in diverting federal time and money to housing problem, and discouraged solutions that would help indebted homeowners at the cost of hurting the very banks that TARP was supposed to prop up.

Later programs such as HAMP and HARP were hamstrung by extreme political paranoia about delivering aid to “unworthy” borrowers. So while the programs (especially HARP) have done some good, the policy has been to specifically not target the most severe needs. Bigger plans released this year would do more, but are being blocked by a holdover Fannie/Freddie regulator whom the administration didn’t replace when it had the chance.

To all this, Team Romney has essentially nothing to say. One of their five bullet points is that we need to improve the job market. Another is to sell government-owned foreclosed property to private investors, which is already happening. A third is to encourage short-sales as an alternative to foreclosure, which the administration has been doing for years now through various initiatives that seem to be bearing some fruit.

In terms of something the parties actually disagree about, Romney proposes to replace the Dodd-Frank Act with “sensible regulation.” If we repeal Dodd-Frank and its tools for orderly liquidation, what would we do instead? Well, the last plank of the Romney plan argues that “the Romney-Ryan plan will completely end ‘too-big-to-fail’ by reforming the GSEs,” i.e. Fannie Mae and Freddie Mac.

This is a real head-scratcher. Not only does Romney not say how he would reform Fannie and Freddie, he doesn’t even begin to try to explain how this would end the “too-big-to-fail” dilemma—presumably because it wouldn’t. Fannie and Freddie may have exacerbated the extent of the housing bubble, but this has literally no bearing on the question of whether or not the economy can survive the liquidation of a diversified mega-bank. If a bank goes bust under Romney’s plan—what happens? Nobody knows. Presumably something “sensible,” but Fannie and Freddie have nothing to do with it. Conservatives have long been rightly critical of Fannie and Freddie, and accurately warned that the free lunch they seemed to create for homeownership might someday prove quite costly to the taxpayer. But retreading a timeless conservative argument about the risks of federal loan guarantees, no matter how valid, isn’t a credible response to too-big-to-fail private banks or problems in today’s mortgage lending.

Romney’s housing plan is depressing. Faced with a clear policy area in which Obama has not succeeded, his opponent came out with a seven-page white paper so embarrassing the campaign dropped it on a Friday night.

This housing issue is the entire 2012 economic debate in miniature. There’s stuff to like in the Obama administration’s record, but there’s simply no denying that overall economic performance has been bad and the president deserves his share of the blame. But rather than giving us a pragmatic turnaround guy, the Republicans are offering a copy-and-paste agenda that could have been rolled out any time in the past 20 years and has nothing to do with today’s specific problems.


Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Students Aren’t Going to College Football Games as Much Anymore

And schools are getting worried.

Two Damn Good, Very Different Movies About Soldiers Returning From War

The XX Factor

Lifetime Didn’t Think the Steubenville Rape Case Was Dramatic Enough

So they added a little self-immolation.


Blacks Don’t Have a Corporal Punishment Problem

Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 

Why a Sketch of Chelsea Manning Is Stirring Up Controversy

How Worried Should Poland, the Baltic States, and Georgia Be About a Russian Invasion?

Trending News Channel
Sept. 19 2014 1:11 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Sept. 20 2014 11:13 AM -30-
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Slate Picks
Sept. 19 2014 12:00 PM What Happened at Slate This Week? The Slatest editor tells us to read well-informed skepticism, media criticism, and more.
Brow Beat
Sept. 20 2014 3:21 PM “The More You Know (About Black People)” Uses Very Funny PSAs to Condemn Black Stereotypes
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 20 2014 7:00 AM The Shaggy Sun
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.