Basically, my answer is that Hillary Clinton is a smart politician, she sees an issue coming, and she is trying to get in front of it.
I have argued repeatedly that the housing and credit bust is going to be a huge issue. It is probably an unsolvable one. After all, in her proposal, Clinton proposes a $1b fund. But, for example, Countrywide’s profits fell in Q2 by about 1/3rd of that number, due primarily to foreclosure problems. When American Home Mortgage went under last week, here was the problem:
The company has been cut off from credit and didn’t have money yesterday to make $300 million of mortgages it had already agreed to provide, the Melville, New York-based company said today in a statement. American Home said it anticipates $450 million to $500 million of loans probably won’t get funded today.
Half the size of her fund in one day. Clinton’s proposals are kind of like throwing a pebble in a river. It makes a splash, but is ultimately, inconsequential because the amounts are just so big.
So why is she doing it? As I said, an issue is coming. It will certainly be debated. And what will happen? Hillary says, according to AP and the NH Union Leader:
Clinton said she’ll introduce her plan when Congress reconvenes next month. If the legislation passes and gets vetoed, she said, she’ll make it a top priority if she’s elected President.
In other words, she wants to be on the front-line of the legislation. The legislation will probably be called Clinton-someone, unless Chris Dodd tries to get in the way of it or own the issue. But Dodd is running for the Cabinet or VP, so there’s little chance of that.
So the answer is that there is an intractable problem. Hillary has found a way to feel people’s pain and be at the center of a debate on the "solving" side. And now anyone, especially a Republican, who criticizes her will be debating the issue on her terms. Good politics.