Going around Congress

It has been clear from the very beginning of the Obama administration that Republicans were out to make him a one term president and to tank just about any initiative he could possibly make.  It has amazed me that the President sought middle ground with folks that had pre-announced their intention to find none.  I could never figure out why executive orders were not flying out of the White House from the get go. It seems that re-election prospects and the economy are now registering as bleak enough to justify that strategy.

In a few short minutes, President Obama will announce a series of executive branch orders that will deal with refinancing mortgages and student loans. He’s in Las Vegas today which is undoubtedly home to  the worst of the housing crisis. The major problem recently has been with underwater mortgages.  The new loans will require no appraisal, no credit check, and you will not have have to be 90 days delinquent.  You can miss only one payment to qualify.  Evidently the new strategy is to move instead of wait for lawmakers.

According to an administration official, Mr. Obama will kick off his new offensive in Las Vegas, ground zero of the housing bust, by promoting new rules for federally guaranteed mortgages so that more homeowners, those with little or no equity in their homes, can refinance and avert foreclosure.

Interesting enough, I just was in Denver discussing a Philadelphia Fed study that showed how the current refinancing programs were actually encouraging default on primary mortgages.   Hopefully, this will reduce the time period between experiencing financial stress and getting relief for many home owners.

And Wednesday in Denver, the official said, Mr. Obama will announce policy changes to ease college graduates’ repayment of federal loans, seeking to alleviate the financial concerns of students considering college at a time when states are raising tuition.

The president’s announcements will bookend a three-day Western trip during which he also will hold fund-raising events in the two cities — both Nevada and Colorado are election battlegrounds — as well as in Los Angeles and San Francisco.

The “We can’t wait” campaign is a new phase in Mr. Obama’s so-far unsuccessful effort — punctuated until now by his cries of “Pass this bill!” on the stump — to pressure Republicans to support the job creation package he proposed after Labor Day. It comes after unanimous votes by Senate Republicans in the past week to block the plan; House Republican leaders have refused to put the measure to a vote.

There are two possible ways this can help.  First, it may keep homes from going to foreclosure and being placed on the market.  This could possibly slow down the price decline in the market which would stop forcing home values into the underwater condition.  Second, lower mortgage payments could keep people their homes and free up some income for other expenditures. The details of the student loan plan have not been announced yet but the President will be talking about it in Denver on Wednesday.   Let’s hope some of this works.  Better late than never.