With the housing crisis still strangling a full economic recovery, President Obama used his State of the Union speech last week to call for further assistance to homeowners who have been able to stay current on their mortgages. The loosely-outlined plan would allow homeowners to refinance their mortgages at current low interest rates and would be paid for by a tax on large banks — many of which contributed to the housing bubble and its subsequent burst.
Congressional Republicans, however, aren’t willing to go along with such a plan and have declared it “dead on arrival” if Obama proposes it, the Wall Street Journal reports:
But any such scheme that relies on a bank tax “would be dead on arrival,” said Rep. Scott Garrett (R., N.J.), chairman of the subcommittee on Capital Markets and Government-Sponsored Enterprises, in an interview last week. “No one is going to suggest that the way to help the mortgage market is to propose a tax indirectly on the system,” he said.
The housing crisis, now in its sixth year, remains one of the biggest drags on the economy, with four million Americans behind on their payments or in foreclosure. The crisis has strangled homeowners who are current on their mortgages too, as housing prices continue to fall. Prices dropped to a post-bubble low in November 2011, according to analysis by Standard & Poor’s and Case Shiller, and “there are few, if any, signs in the numbers that a turning point is close at hand.”
The proposed bank fee is similar to an earlier Obama proposal, the Financial Crisis Responsibility Fee, that was killed by Republicans. Such a fee would apply only to the largest banks — those with greater than $50 billion in assets. Many of those banks were at the center of the housing crisis, proliferating subprime loans and engaging in fraudulent and discriminatory lending and foreclosure practices.
The ten congressional districts that would benefit the most from mortgage relief are all represented by Republicans. But in declaring Obama’s proposal “dead on arrival,” it appears the GOP has put the interests of big banks ahead of those of struggling homeowners.