"I put the blame on Obama, for not clearing out the embeds years ago -- apparently not even wanting to," writes Americablog's Gaius Publius. "And now that he has finally decided to offer a dollop of non-banker bailout (albeit timed for election season), his four-year indulgence of Ed DeMarco has bit him hard." Hopefully, DeMarco's exit can be arranged during the next Congressional recess. But even if that happens, serious mortgage debt relief won't even begin to have an effect for another year or two.
One thing both parties can do to make a difference is extend the Mortgage Forgiveness Debt Relief Act, which expires at the end of the year. It would continue to ensure that homeowners receiving debt relief don't get pushed further underwater by taxes. Not extending the Act would be devastating: It would represent "a final indignity for homeowners who have been abused by the fraudulent mortgage practices of leading banks for years," writes David Dayen. "Just when they think they get relief from their troubles, they get hit with a massive tax bill they cannot pay."
It's the least Congress could do, since, as Dean Baker writes, "Congress could have allowed bankruptcy judges to rewrite mortgages that were written during the housing bubble frenzy, but it backed away from this opportunity." Just as it backed away from changing foreclosure rules to let families continue living in their homes as renters. "Ever since the housing bubble collapsed, the Federal government has refused to take major initiatives to help underwater homeowners," says Baker. "As a result, we are likely to see close to one million foreclosures both this year and next."
Felix Salmon hopes that the backlog of principal reductions could be completed by 2015, but he doesn't think it will be. "This housing crisis, I think, is going to last a decade," he writes. "Or more."
As for the Fed, don't expect it to help. In fact, it has already signaled it won't, even though its own forecasts say that unemployment -- supposedly part of its "dual mandate" -- is going to remain high for some time. "The truly shocking thing isn't the news," writes Matt Yglesias, "but the proposed response -- to do nothing different."
So, there is no bold plan for jobs and there is no bold plan for housing. And if we don't have this debate now, with around 90 days left in this election, it'll be a signal that we really are just going to accept this permanent state of crisis as the new American normal.
"Don't expect things to improve until the people with the power to change direction decide they want to do something," writes Yglesias. But they will only make that decision if we force them to. We can start by demanding a more meaningful election.
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