New McCain Ad Slams Obama on Ayers, Economy
By JIM RUTENBERGIn his increasingly slashing campaign against Senator Barack Obama, Senator John McCain this morning released a paint-peeling advertisement that highlights Mr. Obama’s relationship to Bill Ayers, one of the Weather Underground founders.
The spot calls Mr. Obama a liar, blames liberal Democrats for the sub-prime mortgage crisis, and, in giving them a traditionally Republican label, blames them for pushing “deregulation.” The campaign says the commercial will air nationally. So far this morning, using the television monitoring service ShadowTV, we have found that it has only been shown by news programs — once on MSNBC and once on WINK-TV in Florida – and has not run yet as a paid commercial.
Mr. Obama and Mr. Ayers had worked together on two non-profit boards in Chicago, including that of the Annenberg Challenge, an education project that was funded with a huge grant from the former Nixon administration official Walter Annenberg and which also had on its board a Republican donor and former Nixon aide Arnold Weber. Mr. Weber has donated $1,500 to Mr. McCain this election cycle, according to federal giving records.
The “liar” line of attack by the McCain campaign has developed over the past couple of days. Mr. Obama has indeed at times sought to play down his association with Mr. Ayers, whose group bombed domestic targets in the 1970’s. But as evidence that “he lied,’’ Mr. McCain’s campaign highlighted only Mr. Obama’s April statement that, “This is a guy who lives in my neighborhood, who’s a professor of English in Chicago, who I know and who I have not received some official endorsement from. He’s not somebody who I exchange ideas from on a regular basis.”
In making its case that the liberals caused the housing crisis and fought for less regulation, Mr. McCain’s advertising “back-up” release points to legislation enacted under the Carter administration. More recently it singles out action by Senators Christopher Dodd, John Kerry, Hillary Clinton, Charles E. Schumer along with that of Representative Barney Frank.
As for Mr. Obama, the advertising back-up cites a quote he gave in September, 2007, in prepared remarks: “Subprime lending started off as a good idea - helping Americans buy homes who couldn’t previously afford to.”
What the campaign left out was the rest of the speech, in which Mr. Obama in fact called for greater regulation of the mortgage industry, and spoke about the mortgage crisis that became that much more apparent a year later.
The full passage of the speech, given in New York, follows:
Mr. Obama said, “Subprime lending started off as a good idea - helping Americans buy homes who couldn’t previously afford to. Financial institutions created new financial instruments that could securitize these loans, slice them into finer and finer risk categories and spread them out among investors around the country and around the world.
In theory, this should have allowed mortgage lending to be less risky and more diversified. But as certain lenders and brokers began to see how much money could be made, they began to lower their standards. Some appraisers began inflating their estimates to get the deals done. Some borrowers started claiming income they didn’t have just to qualify for the loans, and some were engaging in irresponsible speculation. But many borrowers were tricked into glossing over the fine print. And ratings agencies began rating bundles of different kinds of these loans as low-risk even though they were very high-risk.
Most everyone knew that some of these deals were just too good to be true, but all that money flowing in made it tempting to look the other way and ignore the unscrupulous practice of some bad actors
And yet, time and again we were warned this could happen. Ned Gramlich, the former Fed governor who sadly passed away two weeks ago, wrote an entire book predicting this very situation. Repeated calls for better disclosure and stronger oversight were met with millions in mortgage industry lobbying. Far too many continued to put their own short-term gain ahead of what they knew the long-term consequences would be when those rates exploded.
Those consequences are now clear: nearly 2.5 million homeowners could lose their homes. Millions more who had nothing to do with this could see the value of their own home decline - with some estimates projecting a cost of nearly $164 billion, primarily in lost home equity. The projected cost to investors is nearly $150 billion worldwide. And the impact on the housing market and wider economy has been so great that some economists are now predicting a possible recession - a prediction all of us hope does not come to pass.
There are a number of lessons that we must learn from this going forward. We know that much of this could have been avoided if the market operated with more honesty and accountability. We also know we would have been far better off if there were greater transparency and more information had been available to the American people.
To that extent, I believe there are a few steps we should take to prevent future crises of this kind and restore some measure of public trust in the market:
First, we need more disclosure and accountability in the housing market. To ensure that potential homeowners aren’t tricked into purchasing loans they can’t afford, I’ve proposed updating the current mortgage rules to establish a federal definition of mortgage fraud and enact tough penalties against lenders who knowingly act in bad faith. I’ve also proposed a Home Score system that would create a simplified, standardized metric for home mortgages, sort of like the APR. This would empower Americans to make smart decisions by allowing prospective buyers to easily compare various mortgage products so they can find out whether they can afford the payments. And I believe we should finally enact the meaningful mortgage disclosure laws that the mortgage industry has been lobbying against for far too long.”
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