The alternative to tinkering with interest rates is to bring the principal balances of mortgages into line the values of mortgaged properties, so that borrowers are not left paying interest on mortgages worth more than their homes, and so that they have equity in their homes and hence an incentive to meet their mortgage payments. This is the centrepiece of Obama's plan: he intends to enable bankruptcy courts to modify mortgage payments, which they are currently prevented from doing by statute. Combined with what he calls a Universal Mortgage Credit, and a variety of other subsidies, the clear idea is to allow borrowers facing default to pay interest against effectively lower principals.
This proposal, like Clinton's, relieves the burdens on struggling borrowers. Unlike Clinton's plan, it does not punish investors or block prospective responsible borrowers from access to affordable home mortgages. On the contrary, it provides a means for those who work hard to amass capital and build a financially secure future for themselves.
What's more, Obama also proposes to enhance the transparency of lending practices by instituting standardised metrics by which prospective borrowers can compare loans, so that they are able to make informed decisions. Such transparency is clearly good for borrowers, but it is also good for investors, who may be encouraged to reinvest by the knowledge that garbage securities with inflated ratings have been culled from the market, and thereby speed the recovery of the housing market. By contrast, Clinton demands "status reports" on the conversion of ARMs to fixed-rate mortgages, a policy that will likely achieve nothing apart from enabling her administration to pad its statistics. Both in conceptual breadth and in every specific policy detail, the Obama plan is vastly superior to the Clinton plan. The choice between the two is not even close.
The moral of the story is that, in this instance as in many others, the prefabricated narrative of Hillary Clinton's concrete substance versus Barack Obama's ethereal uplift is wildly off-base. On a broad range of issues from education to trade to healthcare to immigration to retirement security and more, Obama's proposals are more substantive, more innovative and more intelligently crafted than Clinton's.
In his victory speech after the South Carolina primary, Obama framed his contest with Clinton as "the past versus the future". This remark was widely interpreted to amount to little more than a rhetorical emphasis, or at most a barb at the idea of a restoration of the Clinton dynasty. But Obama's past-versus-future framework has a concrete meaning as well. Whereas his policies represent cutting-edge efforts to promote civil and social equality without impoverishing the country or installing an austerity regime, her policies are frequently a return to the 1970s-style price controls that we rightfully abandoned after it became clear that they had crippled the economy (this is literally so in the case of her interest rate freeze).
Hillary Clinton's critics frequently charge that the junior senator from New York has waged a campaign that looks backward to the 1990s. They are off by about 20 years.
http://commentisfree.guardian.co.uk/...ezer_burn.html