The D&C reports on Bush’s mortgage freeze plan today. Details are still clouded in mystery, since Bush has not actually formally released the plan, but this AP report does a good job of laying out the outlines. I’ve asked yesterday what comes after the 5-year freeze plan. Well, chalk this one up to more Administration punting, because there’s really nothing:

Mortgage rescue will freeze rates || Democrat & Chronicle: Local News

The administration plan would let subprime borrowers who are living in their homes and are current on their payments avoid a costly reset for five years. The hope is that by then the housing downturn will have stabilized, clearing the glut of unsold homes and halting the steep slide in prices that has hit many parts of the country. . .. . . When sales and prices are rising again, the expectation is that homeowners will be able to renegotiate and change their adjustable-rate mortgages into more affordable fixed-rate loans with payments that don’t change.

The report is also a tad rosy in it’s assessment of the damaging hikes of interest rates. It reports that the “average” $1200 monthly mortgage payment could increase by $350 a month. That’s bad, but I do know of at least one case where the payments came close to doubling in a single pay period.

The troubling thing - though predictable - about all this is that the administration does nothing to try to avoid a similar crisis in the future. The underlying problem here is that mortgages have been getting sold on the stock exchange as commodities. That has the double-negative impact of both encouraging deceptive or at least risky lending practices on the one hand, and removing a major source of bank income from the umbrella of FDIC, thus making any losses incurred by banks entirely uninsurable. If there is any reason that the markets are panicking, it is largely due to this second effect.

Hillary Clinton and John Edwards have both proposed their own solutions to the problem. No word yet from Obama or any of the other candidates, that I know of. Of the two proposed solutions, Hillary’s just throws money at the crisis without addressing the underlying issue, whereas John Edwards’ goes hard and heavy at the banks while offering creative ways to minimize the impact to home owners and allowing them their own ways out of trouble.