Friday, December 07, 2007
Mortgage bailout resentment
This week Bush announced his plan to, among other things, freeze the mortgage rates for some lenders for five years so that home-owners who would otherwise lose their homes can afford to stay in them. This helps both the lender and lendee. The lender doesn't have a defaulted loan with which to deal and the lendee can enjoy lower house payments than he would ordinarily have to. And it hurts the rest of us who're smart enough to stay in fixed-rate housing we can afford, because now money is way more expensive for us to borrow than it would have been but for the crash. But is protecting a greedy, wreckless industry from itself a legitimate function of government, to protect investors, borrowers, and lenders from poor loan/mortgage judgements?
What about those of us who lost money when the tech. market crashed back in March of 2000? We lost our butts. Do we get a bail out? Will the government magically restore our 401(k)'s to their original value? Banks are at fault for making billions on these stupid loans, knowing that these people would lose their homes in a few years. The unscrupulous lenders are at fault for reaping huge profits in the short term knowing the loans would be sold before they defaulted. The people getting these loans are at fault for stupidly believing they could afford a house that was way too expensive for them and not reading what they were signing. And finally, the most culpable player in the housing crisis is the government for looking the other way while these moronic loans were sold to dumb people. Why would the government agency who's supposed to be overseeing and preventing this very thing allow it to take place? Because mortgage lenders were donating huge sums of money to political campaigns and essentially buying off the feds long enough to make billions. I blame the Bush administration for the current crisis more than the others.
Here's what should happen: The banks who profited the most from all this, not the American taxpayer, should have to underwrite/guarantee the high-risk mortgages so they won't default. The investors in the mortgage companies should take a hit like any other investor-in-risk who gambles and loses. Where was Bush when my 401(k) lost 30% when the dot.com's tanked?
Anybody having anything remotely to do with government oversight of the mortgage industry should be thrown out of their houses. As far as I'm concerned, they are the biggest criminals of this mess, then come the mortgagers, then the banks, and finally the borrowers who were just ignorant.