Kansas Congressional hopefuls appear cautious on McCain bailout plan
By THE ASSOCIATED PRESS
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TOPEKA — Congressional candidates in Kansas are cautious about John McCain’s mortgage bailout proposal, and the most positive response is coming from fellow Republican Lynn Jenkins in the 2nd District.
Jenkins’ campaign described the GOP presidential nominee’s plan to have the federal government buy bad mortgages directly as ‘‘a step in the right direction.’’
‘‘I think it’s a start,’’ Jenkins said during an interview Thursday. ‘‘I’m just frustrated with a whole lot in Washington. We have a crisis on our hands, one that should have been addressed at least two years ago.’’
McCain outlined his proposal during the most recent presidential debate Tuesday night, and he’s touting it as a way to stabilize home values and help distressed home owners directly. Under his plan, the government would spend $300 billion to buy distressed loans and provide new, fixed-rate mortgages.
The $700 billion financial industry bailout recently enacted by Congress helps homeowners indirectly by allowing the government to buy institutions’ bad debt, including shaky mortgage-backed securities.
As of June, the latest data available, about 8 percent of mortgages in Kansas were subprime, according to First American CoreLogic Inc., Sacramento, Calif., real estate tracking service. Almost 20 percent of the borrowers with those subprime mortgages were 60 days or more delinquent — nine times as many as Kansas borrowers with prime mortgages.
Some economists are skeptical of McCain’s plan and question whether it would solve the housing crisis. Democratic presidential nominee Barack Obama argued Thursday that the government would overpay for mortgages and taxpayers would lose.
Several Kansas candidates said they’re still studying McCain’s proposal. In the Senate race, Democrat Jim Slattery was receptive to the idea but said administering it would be difficult.
Slattery said such a program shouldn’t keep people in houses they truly can’t afford, even if they get help. It should focus on restructuring mortgages for families that have homes they probably can afford but who are distressed.
‘‘I think that we need to do everything that we can to keep ordinary Americans in their homes. If this is done wisely, it will be good for the taxpayers and the homeowners,’’ Slattery said. ‘‘It’s going to be enormously complicated to administer something like this.’’
Slattery’s opponent, Republican Sen. Pat Roberts, is studying McCain’s proposal, said spokeswoman Molly Haase.
‘‘Any relief needs to be targeted toward the Americans who are hurting the most,’’ Haase said.
In the 2nd District of eastern Kansas, which arguably has been the state’s hottest race this year, Democratic Rep. Nancy Boyda still wants to see more details, said spokesman Thomas Seay.
‘‘The financial crisis is hurting Kansas badly, and any idea that could help Kansans stay in their homes is worth considering,’’ Seay said. ‘‘At the same time, the federal government has already spent hundreds of billions of tax dollars buying up bad debt, and she feels that the solution can’t be for the government to just buy everything.’’
In the 3rd District, Republican Nick Jordan has sounded a similar theme in discussing the bailout, saying he would prefer ‘‘free-market’’ solutions rather than a direct government buyout. On Thursday, he called the bailout a ‘‘knee-jerk reaction’’ to the financial crisis.
‘‘There’s no reason to believe that Congress throwing another $300 billion at the problem they created will fix it,’’ Jordan said. ‘‘We need fundamental reforms.’’
Jordan is trying to unseat Democratic Rep. Dennis Moore, the only member of the Kansas delegation to vote for the bailout. Jordan has strongly criticized Moore over the bailout because Moore has served on the House Financial Services Committee for a decade.
Moore argued that the bailout was necessary to deal with the worst financial crisis since the 1930s.
Spokeswoman Rebecca Black said Moore has serious concerns about McCain’s plan, and Moore noted that the bailout legislation already allows the government to work with companies servicing loans to change mortgage terms to help home owners.
‘‘Keeping people in their homes and protecting home values should be our focus as we move forward, as neither the borrower nor the lender wins in a foreclosure situation,’’ Moore said.
Both Roberts and Boyda saw the bailout package as flawed, and Jenkins said she doesn’t believe it goes to the root of the problem. Spokesman Josh Hersh said the McCain plan would eliminate uncertainty over loan defaults and Jenkins will work hard to ensure proper oversight.
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