More than four months after the federal government claimed it was moving to address a mortgage crisis that threatened to take away the homes of millions of American families, steps are being taken to do just that.
Whatever the cause of the delay, President Obama on Wednesday offered the response that was needed --or, at the very least, a piece of the response that was needed.
The president proposes to take administrative actions to spend $75 billion of the Financial Stabilization Fund on facilitating modifications in existing loans and he wants to require lenders that are accepting tax dollars to adopt foreclosure prevention protocols to prevent unnecessary foreclosures.
These are meaningful steps.
The president's ambitious plan could help as many as nine million American families that are currently struggling to make mortgage payments or whose homes are now worth dramatically less than the amount they paid for them. The housing plan uses incentives to homeowners and lenders to ease and encourage the process by which home loans can be restructured or refinanced to avoid foreclosure.
"The plan I'm announcing focuses on rescuing families who have played by the rules and acted responsibly," says Obama, who added that the plan would do this "by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in sub-prime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments."
That's the right sentiment, even if the precise strategy adopted by Obama tends to reward banks and bankers that acted irresponsibly. (More on savvier approaches in a moment.)
This is not a particularly new notion, however.
Federal Deposit Insurance Corporation (FDIC) chair Sheila Bair was promoting a plan to modify mortgages last fall.
Had the Bush White House and the Department of the Treasury listened to Bair -- and to members of Congress such as California Democrat Maxine Waters -- back then, hundreds of billions of dollars might have been saved. And the dollars that were spent might have actually gone to address the real crisis, as opposed to the demand from Wall Street for money to pay bonuses, bail out speculators and keep stockholders happy.
We should have acted "boldly and swiftly" -- and in a fiscally-responsible manner -- last fall. Hundreds of wasted billions later, we finally are. For that, Barack Obama and his administration deserve a good deal of credit -- just as George Bush and his administration deserve a great deal of blame.
The lesson is an important one.