Dems Press for Subprime Aid
I won’t say nothing irritates me more than political grandstanding, but it sure as hell irritates me. In an article from Marketwatch today Presidential nominee Christopher Dodd compares the current subprime mortgage crisis to Hurricane Katrina saying,
This crisis is the equivalent of a slow-motion, 50-state [Hurricane] Katrina, taking people’s homes one by one, devastating their lives and destroying their communities.
Now, I understand what he was trying to say, and I’m sure he doesn’t mean this is as big a tragedy as Hurricane Katrina. Even though I understand what he is saying I don’t agree with him.
The Democrats have come attacked this national crisis with the call to provide homeowners with $200 million in federal-foreclosure prevention funding, which they claim would save 130,000 homes from being foreclosed. They have also said as many as 2 million people could face foreclosure in over the course of the next year. President Bush’s plan he unveiled in August was to help people refinance their homes with government-insured loans, but he made very clear he was not in favor of a bail-out. The call for federal-foreclosure prevention funding sure sounds like a bail-out to me.
Dodd also calls for an end to deceptive mortgage practices, which does make sense, because as far as I can tell some of the people involved in creating this mess should be in jail. However, without the homeowners, many of whom took out loans they couldn’t afford, this problem never would have hit nearly as hard as it has.
At some point people have to be responsible to live within their means, and just because a bank says, "Sure we will approve this loan," doesn’t mean it is a good idea to take it out. There is something to be said for the deception that went on in this subprime game, but that shouldn’t admonish the responsibility of the individual. With this $200 million bail-out proposed by the Democrats the message sent is, "You can gamble on the market and the government will be there to catch you if you fall."
Last month, in a bid to help subprime-mortgage borrowers, the federal regulator for Fannie Mae allowed the companies’ mortgage portfolios to expand modestly. The companies buy mortgages from other lenders and repackage them as securities, freeing lenders up to make more loans.
Democrats have pressed for expansion of the companies’ portfolios, saying that the result would help borrowers.
Sen. Charles Schumer, D-N.Y., said Wednesday that the administration’s action was inadequate, and urged the White House to let Fannie and Freddie buy more loans.
Now, correct me if I am wrong here, but wasn’t this the plan that led to the disaster in the first place? Hedgefunds were picking up loads of these subprime mortgages and bundling them together for investors, such as the Teacher’s Credit Union, who then lost their entire savings when the funds crashed. So now we want to let investment companies pick up the loans from the banks so they can make more loans? Haven’t we been through this?
I really don’t like this plan the Democrats are pushing, and to me it seems like a lame attempt to buy some votes, especially with inflammatory comments about the Hurricane Katrina of real estate. This was no natural disaster, there is responsibilty to be shared here, and that responsibility should not be washed away with taxpayer money.
whereIstand Tags
October 4th, 2007 at 11:32 am
I enjoyed your post. You made some good points. Unfortunately, that live within your means is a foreign concept these days. My father used to say that (he’s deceased) and I think it is great advice.