How to handle the mortgage crisis

What happened

Barack Obama criticized Republican John McCain for urging the federal government not to enact a hasty mortgage bailout. Obama said McCain would “sit and watch” while millions of people lost their homes to foreclosure. (Los Angeles Times, free registration) McCain said this week that “it is not the duty of government to bail out and reward those who act irresponsibly,” and that he wouldn’t play “election-year politics with the housing crisis.” (The New York Times, free registration)

What the commentators said

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McCain seems to think that “talk therapy” will be enough to lift the country out of this crisis, said The New York Times in an editorial (free registration). He wants to organize a meeting with mortgage lenders and get them to pledge to help “distressed” owners stay in their homes. But the country has been down that “fruitless road” already, and what we need now is a president who recognizes the “full dangers of inaction.”

The Democrats are having a field day with McCain’s take on the housing crisis, said Don Frederick in the Los Angeles Times’ Top of the Ticket blog. Hillary Clinton was quick to say that McCain’s approach “sounds remarkably like Herbert Hoover,” whose “tepid response to the Great Depression helped keep the White House in Democratic hands for 20 straight years after he was bounced from office in the 1932 election.”

All McCain said was that he didn’t want “any vast, new government rescue of bankers or borrowers,” said The Wall Street Journal in an editorial. “What he does seem to understand, however, is that most Americans are responsible borrowers who don't want to underwrite the losses of those who aren't. In that, he is politically smarter than Senators Clinton and Obama.”

It’s easy to feel sympathy for people who signed up for risky loans because they figured “savvy bankers” wouldn’t lend them money they couldn’t repay, said Debra J. Saunders in the San Francisco Chronicle. Clinton and Obama have different plans to spend billions to help people avoid foreclosure, but will a government bailout fix things? “Au contraire, the longer the government tries to make bad loans good, the longer it will take for the market to correct. That means spending more tax dollars to make the problem worse.”