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President Obama should acknowledge that something is seriously wrong with the government's response to the financial crisis of 2008 and chart a new course. The wisdom in comic strip legend Pogo's famous remark comes to mind, "We have met the enemy and he is us."
September 7
The Comeback Kid has some advice for banks on resolving the mortgage crisis.
Former U.S. President Bill Clinton outlined his plan for lenders before a standing-room-only crowd packed into an auditorium the size of a football field at the Jacob K. Javits Convention Center during the National Retail Federation's Annual Convention & Expo on Monday.
"This economic crisis is about way more than economics," Clinton said. "It has gone to the core of people's sense of who they are, what they are worth and how they get through life with meaning."
Clinton's plan for resolving the current crisis is to immediately lower principal and interest rates for underwater borrowers to match current valuations and market rates. In exchange, the homeowner would agree to pay the bank a portion of the money earned from eventually selling the home in a recovered market.
"The lender would, in effect, invest in the home so the banks would not have a bad debt on their books," Clinton said. "The harsh way to do it is to foreclose on everyone now and turn everyone into renters — I hate that way."
Clinton threw in a dash of history for some perspective: over the past 500 years, it's typically taken five to ten years for countries to recover from a financial disaster, he said. It's been closer to ten years over the past two centuries for crises related to privately held mortgage debt, he said.
Clinton urged financial companies to clean up the mortgage mess as quickly as possible and then get back to lending.
"If you want America to return to a full-employment economy, you have to accelerate the resolution of the mortgage crisis," he said.
