I just got back from a chat with Douglas Holtz-Eakin, John McCain's top economic adviser. Here are two big takeaways on housing:
1) Holtz-Eakin said the campaign did not have a position on the homeowner bailout/assistance bills being pushed by Sen. Chris Dodd and Rep. Barney Frank—"as a general rule, we do not take positions on bills"—but added that McCain's recent statement of principles on housing help—that it should not help speculators, for instance—could be found in those bills. "They're certainly in there.... There are some taxpayer-backed guarantees so there is some commitment on the part of the taxpayers. It's a voluntary mechanism. It's not overreaching; it's targeted. It is supposed to involve the lender and the borrower both giving something up."
2) I asked Holtz-Eakin about ideas such as the Treasury or the Fed buying up illiquid mortgage-backed securities or a Scandinavian-style nationalization of troubled banks. His answer: "That is [a] nonstarter.... The senator doesn't endorse the government stepping in to save institutions for the sake of saving institutions. The presumption has to be that the financial system as a whole was at risk, and the Fed did its job in preserving the safety and soundness of our financial system."
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