U.S. President-elect Barack Obama will be tasked with managing the implementation of the $700 billion financial bailout and improving the troubled U.S. economy – a task that will likely involve making changes to the existing financial systems.
Specifically, Obama has called for a comprehensive examination of the industry, particularly the mortgage sector. Along with a Democratic-controlled Congress, he will likely seek to enact broad changes – such as stricter regulation for mortgage firms – that Republicans and many in the mortgage industry will be reluctant to embrace.
For instance, a representative from the Independent Community Bankers of America told Bloomberg that the group would lobby intensely against the creation of any single financial-services regulator.
Certain campaign promises designed to address the mortgage crisis may also put Obama at odds with some sectors of the industry.
According to a CNN article, Obama has previously called for the Treasury to require any financial institutions benefiting from the financial rescue package to institute a 90-day foreclosure moratorium to good-faith homeowners. He has also supported allowing judges to reduce principal for borrowers who file bankruptcy.
Some of Obama's additional proposals for the housing industry that are less likely to garner industry criticism include creating a fund to aid state-level and local governments in preventing foreclosure.
He has also sought to increase penalties for mortgage fraud and ramp up law enforcement's fraud prevention efforts. Finally, Obama is reportedly in favor of providing a tax credit to homeowners who do not itemize deductions and receive a tax break for mortgage interest.
Sources: Bloomberg, CNN