It’s a presidential election year. A time when politicians come out in droves to complain to the American public about pork-barrel spending and the massive red tape involved by increased Washington bureaucracy. But Sen. Christopher Dodd, D-Conn., doesn’t have to worry about that. He’s officially out of the race. 

As the national economy continues to languish, politicians like Dodd are looking in earnest at the foreclosure crisis, which may provide the final push over the edge and asking what can be done. 

As chair of the Senate Banking Committee, Dodd is at least offering up a potential solution to the crisis, taking his lead from the time of the Great Depression some 75 years ago.

What Dodd suggested last week, at least as a temporary fix, is for the federal government to create a new agency called the Home Ownership Preservation Corp. Fashioned after the Home Owners’ Loan Corp. formed in the 1930s to deal with foreclosures, the new agency would assist homeowners in refinancing their subprime mortgages — many of which are now resetting at much higher interest rates, resulting, in many cases, in foreclosures, according to a report in the Los Angeles Times. 

Not surprisingly, Senate Republicans are not so quick to sign off on this plan, arguing it puts taxpayer dollars at risk. It was only a few months ago that President Bush declined to accept any alternative that would act as a bailout of either subprime lenders or homeowners who were greedy enough to buy more home than they could rightly afford, and then benefit from their greed. 

If Dodd’s plan were to go forward, it could require initial seed money of some $20 billion to purchase failing subprime loans at “steep” discounted prices and help homeowners refinance at more favorable terms. Still, the Wall Street Journal calls the plan a “political long shot.”

At least one industry analyst, Alex J. Pollack, a resident fellow at the American Enterprise Institute, a conservative think tank, told the Times that he thought the plan was “a reasonable project” during hard economic times that has historical precedent.

Dodd is scheduled to hold a private meeting with Federal Reserve Chairman Ben Bernanke to discuss the state of the national economy and the deepening housing crisis.

ForeclosurePulse.com will continue to follow this and other stories concerning the impact foreclosures are having on the national economy, the Washington hierarchy and the presidential election.