Posted on Tuesday, October 19, 2010
The calculus is clear for most Democratic incumbents, especially those in tight races like Senate Majority Leader Harry M. Reid: Nothing could be worse on the eve of elections than images of people being booted out of their homes by big banks that have relied on sloppy, if not fraudulent, paperwork.
But reviving the economy requires repairing the housing market, which won't happen until foreclosed properties and delinquent mortgages are dealt with. So the White House, which is looking past the midterm elections, has been restrained. Housing and Urban Development Secretary Shaun Donovan wrote over the weekend that "a national, blanket moratorium on all foreclosure sales would do far more harm than good, hurting homeowners and home buyers alike."
It's a recipe for legislative inaction, especially with lawmakers busy campaigning. For a White House seen by Wall Street as too populist, and by many liberals as too close to Wall Street, that might not be a bad outcome. Democratic candidates can strike a populist note, letting the Obama administration take the economic high road while pressing banks to define the scope of the latest financial mess.
"There's a problem here," said one veteran Democratic political consultant, who spoke on the condition of anonymity because of the issue's sensitivity. "The politics are very attractive to say, 'Let's have a moratorium.' But shutting down foreclosures has the potential of shutting down the whole housing market, which isn't helpful to anybody."
For now, most of the biggest banks, sensitive to political winds, have voluntarily frozen foreclosure sales. Some analysts believe the freeze could last until January. That gives banks until the end of the quarter to figure out the extent of their problems, and it delays foreclosures until after the election as well as the Thanksgiving and Christmas holidays.
"I think that they're trying to see how this is playing," said one political consultant working for the financial services industry. "They're trying to gauge the political intensity around the issue."
Democratic pollster Peter Hart says intensity runs high. "There are two things of critical importance to American households," he said. "One is their job and two is their house."
Hart said that the foreclosure issue resembles the unemployment issue. Ninety percent of Americans are employed and more than 9o percent of homeowners pay their mortgages, Hart noted, but "the real issue is the space it takes in peoples' fear and uncertainty. It is the number of people who say, 'This could be me.' "Most Democratic consultants say President Obama has been able to stay fairly neutral because he isn't on the ballot and because broad economic recovery is more important.
All the same, some political veterans say that Obama could display more sympathy. Steven Mufson
Washington Post Staff Writer