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'Financial Hole' Challenges Candidates

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The Tampa Tribune

Published: July 6, 2008

Far too many people are buckling under the strain of trying to run their households as consumer prices rise, home values decline and banks get tougher on letting them use credit to make up the shortfall in their pay.

Many Americans are in such financial distress because of mounting debt that any new president will have a difficult time trying to fix the lending mess at the root of their problems.

So do John McCain and Barack Obama, the presumptive presidential candidates, really understand the financial hardship of the people they seek to lead? Can they effectively tackle the issues that are dragging down the economy?

Obama carved out some time for me recently to discuss his plan to deal with the economic crisis. McCain has yet to respond to repeated requests for an interview.

Here's what the candidates are increasingly facing. Every day, I get an e-mail from someone who is either struggling with a job loss, massive credit card, medical or student loan debt, or the prospect of losing a home. Others ask for advice to help make their money last until the end of the month.

The e-mail messages I receive are representative of the thousands of people the presidential candidates will hear from on the campaign trail. The policies of the winner of this race will help determine how the United States turns the corner in this crisis.
Foreclosure Prevention
My conversation with Obama began with a discussion of the housing crisis. Obama said his plan is to create a $10 billion foreclosure prevention fund. The fund, which he would, in part, underwrite with penalties assessed on lenders who act irresponsibly and commit fraud, would not help people who were speculating or who lied on their mortgage applications, he said.

"I'm interested in making sure people get help ... who are working hard but just found themselves underwater as a consequence of some of these deceptive practices or a lack of clear consumer information," Obama said. "We have to do our best to keep them in their homes. Not just for them but for the community as a whole.

"The sooner we can stabilize the housing market, the better the economy will be."

Obama ticked off a list of his proposed economic fixes: another stimulus package, a universal health care plan and tax cuts for the middle class.

Obama's Debt Story

When discussing consumer debt, Obama had a story to tell that was similar in some respects to many people in the country.

Until a few years ago, the candidate and his wife, Michelle, were deep in debt. Together they were carrying $120,000 in student loans they took on to pay for law school.

"We were making payments the size of a mortgage every month," Obama said.

Although Obama acknowledged that he and his wife were blessed to have enough income to service that debt, it wasn't until he wrote two best-selling books, "Dreams From My Father" and "The Audacity of Hope," that the couple were able to pay it all off.

Were he to become president, Obama said he wants to initiate reforms to address "the whole debt industry that has really got people in a financial hole they never dig themselves out of."

When he talks about his own family's situation, I believe that Obama gets that we must move away from an economy driven by debt-laden consumers.

Nonetheless, the problems are so large and the changes required to correct it so far-reaching - requiring legislative reforms and changes in people's behavior - that even a self-proclaimed change-agent president would be sharply tested on this issue.

Michelle Singletary can be reached at The Washington Post, 1150 15th St. N.W., Washington DC 20071.

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