Obama Blasts McCain Mortgage Proposal in Dayton, Ohio

Speaking at a rally in Dayton, Ohio, today, Barack Obama continued to blast John McCain’s proposal to spend $300 billion to buy mortgages from struggling homeowners, accusing the Arizona senator of “erratic” behavior in his responses to the financial crisis.

Obama’s campaign yesterday attacked the plan as costly and reckless, and Obama today painted it as a safety net for irresponsible lenders.

“It’s a plan that would guarantee that American taxpayers list by handing over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess,” Obama said, according to prepared remarks.

The plan, Obama suggested, would actually encourage lenders to write loans homeowners could not pay off.

“His bailout would make it more likely that those lenders keep up their bad behavior,” Obama said. “Just yesterday, Countrywide, one of the nation’s largest lenders, reached an agreeement to help homeowners refinance their mortgages. Under Senator McCain’s plan, lenders like Countrywide wouldn’t have any incentive to come forward and help homeowners–because they could just wait for the government to bail them out.”

McCain’s plan would use $300 billion of Treasury’s recently granted $700 billion bailout fund to purchase mortgages directly from homeowners, replacing them with fixed-rate mortgages insured by the Federal Housing Administration. The McCain campaign has suggested that the Treasury would offer fixed rates in the low five percent range; fixed-rate mortgages, on average, currently carry interest rates in the mid to high five percent range.

Obama attacked McCain for “erratic” and “uncertain” leadership exemplified by what Obama said were McCain’s shifting position on the housing crisis.

Obama charged McCain with shifted his position on how to help home owners during Tuesday’s second presidential debate. McCain used the debate to announce a new proposal to direct the Treasury secretary to buy $300 billion in mortgages.

“This is the kind of erratic behavior we’ve been seeing out of McCain during this crisis,” Obama said.

“I don’t think we can afford that kind of erratic and uncertain leadership in these uncertain times,” he said.

–Chris Good and Ian Swanson