Sen. Barack Obama said at the Oct. 15 debate at Hofstra University that Republican opponent John McCain's plan to stem the mortgage meltdown "could be a giveaway to banks if we're buying full price for mortgages that now are worth a lot less. And we don't want to waste taxpayer money."
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McCain, speaking about his plan at the debate in Hempstead, New York, said the government should take $300 billion of the money set aside for financial recovery "and go in and buy those home loan mortgages and negotiate with those people in their homes, 11 million homes or more, so that they can afford to pay the mortgage, stay in their home."
On his Web site, McCain calls it "an American Homeownership Resurgence Plan." Under his plan, the government would buy up some troubled mortgages at their full value - meaning the lenders would not take a loss. The government would then renegotiate those mortgages, so that eligible homeowners would be paying rates based on their homes' current, reduced value.
Obama's assertion follows an ad released by the Obama campaign on Oct. 9 that said McCain's plan "would shift the burden from lenders to taxpayers, guaranteeing a loss of taxpayer money."
Obama, in the ad, highlights this quote from a CNNMoney.com story: "Much of the burden of paying to keep troubled borrowers in their homes will shift to taxpayers." The McCain campaign acknowledged that point, both on a conference call with economic adviser, Douglas Holtz-Eakin on Oct. 8 and in a follow-up interview with CNN's Les Christie, writer of the CNNMoney.com story.
The McCain campaign says the plan would cost about $300 billion. "Funds provided by Congress in (the) recent financial market stabilization bill can be used for this purpose; indeed by stabilizing mortgages it will likely be possible to avoid some purposes previously assumed needed in that bill," the
campaign Web site says.
The Verdict: True. The McCain campaign acknowledges the plan would shift the burden to taxpayers.