[Scott Simon:] The future of the state of the U.S. housing market was a primary focus for the White House this week. On Tuesday's State of the Union address, President Obama unveiled a new plan to try to correct the housing downturn. It would allow qualifying homeowners the chance to refinance their mortgages at historically low rates.
[President Barack Obama:] No more red tape, not more runaround from the banks. A small fee on the largest institutions will ensure that it won't add to the deficit. And we'll give those banks that were rescued by taxpayers a chance to repay a deficit of trust.
[Scott Simon:] Mr. Obama said his new plan would save homeowners about $3,000 a year on their mortgages. For more, we're joined by our friend from the business world, Joe Nocera, also a columnist for the New York Times. He joins us from New York. Joe, thanks for being with us.
[Joe Nocera:] Thanks for having me, Scott.
[Scott Simon:] And what exactly is the president proposing? Who would benefit?
[Joe Nocera:] Well, anybody who has a mortgage at a higher rate than the current rate which is pretty much everybody. I mean, we are at historically low rates. And the idea of being able to easily refinance at a lower rate, a get a fixed 30 year at these historic you know, 4 percent or so, would be pretty wonderful. You know, there are the devil is in the details, as it has always been with the administration's housing policies. And it's really hard to know exactly who will qualify and how exactly it will work. But in theory, this is what we need to do to get housing back.
[Scott Simon:] Yeah, and that would free up capital that could be spent elsewhere in the economy.
[Joe Nocera:] Well, exactly. I mean, you lower your mortgage, you have more money every month and you don't feel as constrained. And you don't feel this overhang of mortgage debt, which the country desperately needs to get down anyway. And people will start spending again, yes. Housing leads the country out of a recovery. That is a historic pattern. It has not happened this time because frankly the federal government's been too busy bickering how to fix housing, and so nothing's happened.
[Scott Simon:] The other part of the president's housing proposal is this new investigative unit would focus on abusive lending practices. It would be part of the existing Financial Fraud Enforcement Task Force, which the administration set up in 2009. How do you peg the chances for success of this new agency?
[Joe Nocera:] Slim, to be honest, Scott. The Justice Department and the various states have done a very, very poor job of prosecuting mortgage fraud. They've only gone after small fries; there's not a single person from Countrywide who's been prosecuted for the millions of fraudulent mortgages that that company made. It's really quite astonishing. So, I'm very skeptical with this new effort will make much of a difference.
[Scott Simon:] The White House, though, says the new unit is going to be chaired, by the way, by Eric Schneiderman, the attorney general of New York. And the White House says this new task force will have more jurisdiction and resources than what they've had, and the Attorney General Eric Holder says subpoenas have already been served.
[Joe Nocera:] Well, let's see. Let's see. Eric Schneiderman is an interesting person to run this. He's been very skeptical of the efforts of the various states to do this big settlement with the banks, which is not yet happened. And he one of the reasons he's skeptical is he says it's not tough enough, it lets the banks off the hook, and so on and so forth. So, there is a possibility that that could make a difference. And secondly, New York has something called the Martin Act, which other states don't have, which is a very powerful tool for prosecuting financial crimes. So, you know, that is the ray of hope. However, given the Department of Justice's track record in failing to prosecute financial fraud and financial crimes since the crisis, you know, I say, you know, as we say, it remains to be seen.
[Scott Simon:] This proposal would require congressional approval. How do you see the chances of that?
[Joe Nocera:] Well, I think the president put it pretty well in the State of the Union address when he said, you know, there are a lot of people who don't think anything's going to happen, and none of these proposals will pass this Congress. I think that's exactly right. So, don't lay your hopes on this one.
[Scott Simon:] New York Times columnist Joe Nocera, joining us from the studios of the Radio Foundation in New York. Joe, thanks so much.
[Joe Nocera:] Thank you, Scott.