Sen. Barack Obama Unveils Economic Policy in Ohio

I welcome Senator McCain's proposal to waive the rules that currently force our seniors to withdraw from their 401(k)s even when the market is bad. I think that's a good idea, but I think we need to do even more. Since so many Americans will be struggling to pay the bills over the next year, I propose that we allow every family to withdraw up to 15% from their IRA or 401(k) - up to a maximum of $10,000 - without any fine or penalty throughout 2009. This will help families get through this crisis without being forced to make painful choices like selling their homes or not sending their kids to college.

The third part of my rescue plan is to provide relief for homeowners who are watching their home values decline while their property taxes go up. Earlier this year I pushed for legislation that would help homeowners stay in their homes by working to modify their mortgages. When Secretary Paulson proposed his original financial rescue plan it included nothing for homeowners. When Senator McCain was silent on the issue, I insisted that it include protections for homeowners. Now the Treasury must use the authority its been granted and move aggressively to help people avoid foreclosure and stay in their homes. We don't need a new law or a new $300 billion giveaway to banks like Senator McCain has proposed, we just need to act quickly and decisively.

I've already proposed a mortgage tax credit for struggling homeowners worth 10% of the interest you pay on your mortgage and we should move quickly to pass it. We should also change the unfair bankruptcy laws that allow judges to write down your mortgage if you own six or seven homes, but not if you have only one. And for all those cities and small towns that are facing a choice between cutting services like health care and education or raising property taxes, we will provide the funding to prevent those tax hikes from happening. We cannot allow homeowners and small towns to suffer because of the mess made by Wall Street and Washington.

For those Americans in danger of losing their homes, today I'm also proposing a three-month moratorium on foreclosures. If you are a bank or lender that is getting money from the rescue plan that passed Congress, and your customers are making a good-faith effort to make their mortgage payments and re-negotiate their mortgages, you will not be able to foreclose on their home for three months. We need to give people the breathing room they need to get back on their feet.

Finally, this crisis has taught us that we cannot have a sound economy with a dysfunctional financial system. We passed a financial rescue plan that has the promise to help stabilize the financial system, but only if we act quickly, effectively and aggressively. The Treasury Department must move quickly with their plan to put more money into struggling banks so they have enough to lend, and they should do it in a way that protects taxpayers instead of enriching CEOs. There was a report yesterday that some financial institutions participating in this rescue plan are still trying to avoid restraints on CEO pay. That's not just wrong, it's an outrage to every American whose tax dollars have been put at risk. No major investor would ever make an investment if they didn't think the corporation was being prudent and responsible, and we shouldn't expect taxpayers to think any differently. We should also be prepared to extend broader guarantees if it becomes necessary to stabilize our financial system.

I also believe that Treasury should not limit itself to purchasing mortgage-backed securities - it should help unfreeze markets for individual mortgages, student loans, car loans, and credit card loans.. And I think we need to do even more to make loans available in two very important areas of our economy: small businesses and communities.

On Friday, I proposed Small Business Rescue Plan that would create an emergency lending fund to lend money directly to small businesses that need cash for their payroll or to buy inventory. It's what we did after 9/11, and it allowed us to get low-cost loans out to tens of thousands of small businesses. We'll also make it easier for private lenders to make small business loans by expanding the Small Business Administration's loan guarantee program. By temporarily eliminating fees for borrowers and lenders, we can unlock the credit that small firms need to pay their workers and keep their doors open. And today, I'm also proposing that we maintain the ability of states and local communities that are struggling to maintain basic services without raising taxes to continue to get the credit they need.