Liberal Foreclosure Politics

Only a few days ago, I pointed out that I thought that most politicians were misreading the politics of mortgage bailouts. That's because most homeowners aren't in trouble. Most people in this country aren't in need of any bailout, and thus, the overwhelming majority of folks will be paying for the bailout of the overwhelming minority. The media and many politicians are trying to paint those in trouble as mislead and taken advantage of, however I think most of those that make their payments on time see those in trouble as irresponsible. I just don't see those that are responsible as taking too kindly to seeing their taxes pay for those that aren't responsible. Any bailout will be on the backs of those that make payments on time. Whether it is with tax money or simply higher rates, any bailout will be felt by those that were responsible. Of course, in the liberal world of the New York Times, all the current bailout plans don't go far enough. Politically, the New York Times wants to see political courage in bold and expansive bailouts.

With foreclosures running at about 20,000 per week, at least 100,000 more families are likely to lose their homes before Congress passes a relief bill. And even then, the measure may fail to stanch the problem unless Congress comes up with something that is significantly better than proposals currently in either chamber.

To produce a worthy relief package, lawmakers will first have to scrap most of the provisions in a bill passed last week by the Senate.

...

Lawmakers will also have to ditch an unhelpful item in a bill from the House Ways and Means Committee — a tax break for first-time home buyers. It makes no sense to encourage buyers to jump in when further price declines are likely. Scarce resources should be put toward preventing foreclosures.

There are parts of each of the bills that should be preserved, including money for foreclosure-prevention counseling, for issuing tax-exempt bonds to help refinance subprime mortgages and for local governments to buy up foreclosed properties. But that is only a start.

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The plan for an F.H.A.-backed rescue also would rely on lenders to voluntarily reduce the loan balances to a level where the F.H.A. could take over. Volunteerism is not working. What’s needed is a stick like the bankruptcy amendment. Lenders will be more likely to modify a loan if they know the alternative is having a judge do it.

Lawmakers know what to do. They just need the political courage to confront the mortgage industry.

There are certain things that I agree with the New York Times on. For instance, they are absolutely correct when they say that moving these loans to FHA would put undo burden and risk to the tax payers. (not quoted but in the article) I also agree that the Senate bill is total garbage, though for many different reasons.

To me the only political courage expressed so far was expressed by John McCain when he first said that there would be no bailouts for anyone, borrowers included. Of course, after he was attacked, he immediately backed away to a much less political courageous position, and one that makes no policy sense whatsoever. There is, however, absolutely nothing politically courageous about providing a government handout to folks that are struggling.

In the view of the New York Times, real political courage is taking on the banks and forcing them to not only artificially reduce rates but to artificially reduce loan amounts in order to allow folks who can't afford their mortgage to afford it through artificial government action. To me, this is the least courageous thing to do. This is nothing short of vote buying. Yet, the New York Times sees anything that gives government handouts as "politically courageous".