Michelle Malkin » The Democrat clamor for a housing bailout

The Democrat clamor for a housing bailout

By Michelle Malkin • August 24, 2007 09:29 AM

Last week, it was Hillary Clinton crusading for a socialist housing bailout plan. Today, it’s bond mutual fund mogul William Gross in the Washington Post:

et with it, Mr. President. This is your moment to one-up Barney Frank and the Democrats. Create a Reconstruction Mortgage Corporation. Or, at the least, modify the existing FHA program, long discarded as ineffective. Bail ‘em out — and prevent a destructive housing deflation that Ben Bernanke cannot avert. After all, you’re the Decider, aren’t you?

And here are more Dems climbing aboard the housing gravy train:

Congressional Democrats have been ratcheting up calls for tighter regulation, and even the possibility of bailouts for distressed homeowners.

Although Mrs. Clinton and Mr. Edwards have both proposed a fund to help homeowners, the focus in Congress has been on expanding the ability of government-sponsored companies like Fannie Mae and Freddie Mac to finance more home loans.

Senator Charles E. Schumer of New York and Senator Dodd have both proposed raising the caps on the volume of mortgages that Fannie Mae and Freddie Mac can hold in their own portfolios.

Both companies package mortgages into securities that can be sold on Wall Street and into world financial markets. But the companies also hold millions of mortgages in their own portfolios. Under current regulations, the companies are each allowed to keep about $700 billion in mortgages, and neither has much room to acquire more loans. Democrats contend that Fannie Mae and Freddie Mac could provide a crucial source of refinancing for people trying to extricate themselves from unmanageable loans.

But the Fed and the Treasury Department have argued that the two companies’ portfolios have effectively become government-sponsored behemoths that crowd out private lenders and could pose big risks to taxpayers if their holdings plunged in value.

The mortgage blogger at Another F*ed Borrower says “I told you so” and notes that LA Democrat City Councilman Richard Alarcon has also joined the mob:

I told you it was only a matter of time until the politicians started talking BAILOUT for people that bit off more than they could chew. They can’t have it both ways (or can they). They can’t have 70% ‘home ownership’ (more like home mortgageship) on one hand, and then use taxpayer money to say that nobody loses a house on the other. The thing is, 70% of the population probably shouldn’t be owning a house, and certainly not at the prices that many of them paid. The coming ‘foreclosure boom’ is going to realign the home ownership percentages to more realistic levels and realign housing prices to levels that reflect incomes…

…pparently, biting off more than one can chew is no longer an individual problem, it is society’s problem. Who knew that the ‘leaders’ of our country were so against personal responsibility. Aside from the capital gains tax, ’society’ didn’t really benefit from the massive property appreciation, so why should society have to foot the bill for the ‘bad investments’ that were made.

Sadly, it isn’t just politicians on the national level that are screaming BAILOUT! Seems that Los Angeles City Councilman Richard A[l]arcon wants CITY, STATE, and FEDERAL funds to bailout CITY homeowners that cannot afford their mortgages!!

Insane: Take from responsible taxpayers and give to homeowners who made bad investments and are up to their eyeballs in debt.

It’s the Democrat way.

Posted in: Subprime crisis

Printer Friendly

comments (106)

trackbacks (9)

See what others have said

Note from Michelle: This section is for comments from michellemalkin.com's community of registered readers. Please don't assume that I agree with or endorse any particular comment just because I let it stand. A reminder: Anyone who fails to comply with my terms of use may lose his or her posting privilege.

Trackbacks

Trackback URL

Comments

« Older Comments

#120255

On August 25th, 2007 at 12:51 pm, graysonret said:

Patchthebun is a good example. I hope everyone here remembers to teach their kids finances and budgets. They will be most grateful. We are all bombarded 24/7 to buy,buy, buy, TODAY. The future(payments) comes very quickly. A house is not required spending. Liquids assets are essential first, before property. Thinking money will be fine next year, doesn’t pay the bills. Always have something to fall back on first. A good example is a couple I know. They spent $140K on a house…all their money, because they didn’t have anywhere near a decent credit score. House is in both their names. Now, they’re divorcing. House is worthless because they haven’t any credit to draw equity. If they sell, they split the money, which is tough on her, because it was all her money, with 3 kids. It would have been better to rent and invest the money. She can’t even afford a lawyer to get a divorce. I know, I’ve “loaned” money a couple of times. Sad.
#120258

On August 25th, 2007 at 1:21 pm, nbarry said:

If every American today were to live within his means, retail purchases would plummet, and only God knows how many businesses would go belly up and how many people would lose their jobs.

This didn’t have to be. Let’s look at history. After World War II, our country went through a period of great prosperity. There were no such things as credit cards or adjustible-rate mortgages. Lenders had to adhere to usury laws that kept interest rates down. Businesses that wanted to merge or acquire had to be mindful of antitrust laws that were more likely to be enforced than they are today. Fair trade laws aimed to keep small businesses from being swallowed up by big ones, albeit imperfectly. The income of a husband as a rule was sufficient to support the entire family, so many wives stayed at home to raise the children. Labor unions, at least the honest ones, generally were able to gain income and benefits for their members that kept pace with the cost of living, and labor-manangement grievance committees settled problems that government is now called on to resolve. Despite the loathing of unions by conservatives, workers established “made in the U.S.A” as the gold standard of industrial quality.

So how did we get from there to here? The answer is the key to straightening out the economic mess we are in. Sen. Schumer’s bailout proposal may not work, but neither will moralistic finger pointing.
#120281

On August 25th, 2007 at 5:54 pm, crashemt said:

nbarry-

It is people like you that have made me completely lose trust in America today.

My back can carry no more. My wife and I worked hard for decades. She EARNED her PhD through hard labor. No assistance was available. I worked 65+ hours/week to support myself through college, and her through her doctorate. We are finally in a place where we have enough money to consider buying a house.

There are no houses in the DC area that are within our means. This mess, caused by irresponsible consumers and greedy businesses, has overpriced the market ten-fold. No 4000 square foot space can ever be justified at $1 million, nor can a 2500 square foot space 30 miles out of town be justified at $500,000. The facts simply do not bear it out.

So to have me pay extra taxes to bail out either side is CRIMINAL. That’s the most corrupt form of usary, where I am charged an outrageous rate for something I do not own, nor can make any claim to or against.

Fair trade be damned! Caveat Emptor!

It is not the job of the Federal government to give benefits to the worker. It is not the job of the Federal government to provide housing or food to the individual. Why should the American taxpayer have to pay to support an unsupportable system of consumer demand?

If the business cannot fit a demand, it should die out! If the laborer in that business is so blind as to ignore the lack of demand and affect change in themselves or the company to save the business, then let them live in the cold harsh reality of life.

We ignore Darwin in every attempt to bail out some sector of business, employee, or consumer. The stupid need to die out. It is the natural order of things. The herd must be thinned, or the entire herd will starve, become disease stricken, and die!
#120296

On August 25th, 2007 at 7:58 pm, graysonret said:

I live in the D.C. area too, crashemt. Price of housing around here is absurb, especially when I see prices up at home in New England. My wife and I have seriously talked recently about picking up stakes and heading up north. Same salaries, cheaper housing. Unfortunately, we have become a “welfare” country where we all want the gov’t to care for us, instead of hard work and competition, which is what built this country. I wish you luck crashemt.
#120297

On August 25th, 2007 at 8:15 pm, PRCalDude said:

So far, the only thing I’ve seen the government actually produce through its social welfare tampering is gangs and minorities with an entitlement mentality. I should have just done what everybody else did: sign up for some neg-am i/o loan and sit tight until Big Brother comes to my aid.

The politicians need to wake up to the fact that immigration works both ways. if they’re that set on taxing the middle class until they’re impoverished paying the bills of government welfare brats, perhaps they need to learn to get along without us. We’re already taxed more than the ancient near-eastern kings ever demanded of their subjects, if you can imagine that. The Egyptian pharoahs never took more than 30%, if you can believe that. I make a middle class income and still have to be frugal with how much I spend renting, while waiting probably in vain for the market to come down. Looks like I was the fool.
#120304

On August 25th, 2007 at 9:37 pm, nbarry said:

Darwin? So much for compassionate conservatism. I never said that I favor Schumer’s bailout and even expressed doubt that it will accomplish the benefits for the country as a whole he claims it will.

It is the job, however, of the Federal government to keep interstate commerce on the ethical up-and-up. When it allowed our securities and commodities exchanges to morph into gambling casinos, it clearly failed.

I remember when Schumer’s Republican predecessor Alphonse D’Amato proposed a statutory cap on credit card interest. The howls of the ~~loan sharks~~ financiers were deafening. Why, if such a bill passed, they would have to stop issuing their plastic to deadbeats. Imagine!

By the way, since many of you are deeply perturbed over high taxes, it is my duty to point out that President Bush, in his budget submitted to Congress, has requested that the Alternative Minimum Tax be maintained at the same rate as 30 years ago and with no indexing for inflation over the course of that time. The AMT is designed to sneak up on and clobber us working stiffs without warning when we fill out our 1040’s. Furthermore, the deduction for property taxes is disallowed in determining AMT taxable income. As I said, so much for compassionate conservatism.
#120333

On August 25th, 2007 at 11:30 pm, Patchthebun said:

Yep, we’re in the DC area too. I don’t count myself a victim though, we made some choices which seemed good at the time, but turned out to be not-so-smart. We’re trying to get out of this area but my husband’s company won’t transfer him. He’s paid well for what he does, but he doesn’t have an undergraduate degree so we’re limited in our options for a career change. We’ve decided that he’ll go back to school and finish up a degree so we can move to a part of the country that is affordable.
If we were only 5 years older, and had bought a home 5 years earlier, we would have been able to afford to live here. We have to pick up and move a state away from our family to have a hope of living somewhere we can afford.
#120361

On August 26th, 2007 at 4:03 am, greenLibertarian said:

Your words are gold, cal-dude. The responsible ordinary people of this country get screwed by the irresponsible and the people who enable or prey on them. As a 50-year-old soon-to-be-unemployed professional, since my company and others like it only want to hire H1-B workers and won’t even let me work at a comparable wage, I am simply saving as much as possible and preparing to emigrate to a low-living-cost country. I am not going to stay here in Parasite Nation and wait for the gov to take my savings and earnings away to distribute to others who mostly have done nothing or not enough to earn it. Despite its dismal eco-record, I plan to go to China. At least people are expected to earn their keep there.