Off the hook

Early predictions that Iraq would serve as the defining issue of the 2008 presidential campaign have given way to a new focus on a slumping economy. At the center of that market dip, the housing crisis stands as the watershed indicator of the direction in which candidates will govern.

On one side, Democrats Hillary Clinton and Barack Obama castigate a corporate culture of greed for having triggered the foreclosure surge and excuse borrowers from culpability with promises of government-funded bailouts. On the other, Republican John McCain favors federal relief only for those borrowers victimized by fraudulent or deceitful lending practices.

Clinton and Obama likely hold the upper electoral hand with their position, providing security for voters wracked with uncertainty over their financial futures. Unlike his straight-talking clarity on Iraq, McCain's stands on the mortgage crisis play like Democrat lite-conservative only in their lack of boldness and creativity.

By contrast, Clinton has offered exceptionally bold policies, such as a 90-day moratorium on subprime foreclosures and a five-year freeze on subprime interest rates. More recently, she has called for a $30 billion emergency fund to help states address the problem on a more local level.

Obama likewise supports a federal fund to help borrowers refinance. His plan calls for $10 billion raised from enacting stiffer fines on fraudulent lenders.

Moving from Iraq to economic issues provides Democrats a chance to lead the conversation-and to continue campaigning against George W. Bush, a tack made more difficult by the progress of the Iraq troop surge. Democrats charge that the Bush administration failed to recognize early warning signs of the mortgage crisis and reacted far too late to a mess otherwise avoidable.

Democratic Gov. Bill Ritter of Colorado, a state whose acute foreclosure trouble began earlier than most, told WORLD his constituents were disappointed with Bush's initial inaction on the matter: "I think at the end of the day Republicans are going to pay for that."

Placing blame on the White House and corporate lenders offers delinquent homeowners a way out of self-examination and financial penance. And the Democratic narrative is not without credence. Many first-time homebuyers trusted the advice of suit-wearing lenders behind impressive desks, who littered their sales pitches with assurances that equity would climb, that rates would stay low, and that buying as much house as possible constituted sound investing.

Banks are now paying for such practices, many having since abandoned the subprime market or at least halted the funding of nothing-down, interest-only loans to people with lousy credit. Borrowers might soon learn similar lessons-provided elected officials allow it.