Memo to Obama: Welcome to Hard Times

Worse Than Subprime, the Alt-A Mess Now Looms

By Mary Kane, 11/7/08 9:00 AM

Given the reality of a credit crunch that shows few signs of easing despite the billions of dollars of government money thrown its way, an alternative to offering the new president-elect congratulations might be: “Welcome to hard times.”

The honeymoon period that most new presidents enjoy has probably been voided this time around. From Day One, as the former Democratic presidential candidate, Sen. Hillary Rodham Clinton used to say, President Barack Obama will face a financial crisis that only threatens to become more severe at the start of 2009. And it’s one for which there are no simple fixes — only controversial and painful remedies that may or may not work.

“It’s really analogous to choosing a new skipper for the Titanic after it already hit the iceberg,” said Guy Cecala, publisher of Inside Mortgage Finance, which covers the subprime lending industry. “It’s not the kind of situation where the president can sit down and and concentrate on a plan. He’ll be in damage-control mode every single day.”