Republican Senator speaking, “No, No, No! We must not bail out Fannie and Freddie. We must allow the free markets to work. We cannot risk the moral hazard. My vision of America is not consistent with the kind of socialism this would promote.”
Republican Senator thinking, “Yes, Yes, Yes! Paulson and Bernanke will not let Fannie and Freddie fail. First Enron and now the mortgage crisis with awful oil prices, inflation and the falling dollar. The consequences of our deregulation plans should be killing us. Instead, I get to reassure my base that I am a pure free market guy, while the taxpayers pick up the tab.”
Steve
I think it’s rather lovely that our government is willing to bail out multiple corporations but not homeowners – the latter because…it would help companies that acted irresponsibly????????
Eighty years after we recovered from the Depression, during which is was clearly shown wealth trickles up when the poor are supported but not down when the rich are bloated, we continue to shovel public cash into the bonus checks of rich execs.
I think you are being a bit romantic here. Most of the homeowners suffering these days are gamblers who lost their romantic bets on hope. The gambled that home values would magically rise forever, enabling them to extract equity via a HELOC or loan and have that $40,000 kitchen makeover with granite counter tops and their equity, too. Or they thought they deserved $200,000 of house because they could get it at artificially lower initial rates and that somehow the long-term math would turn out to be what they wanted it to be, not what was explicitly stated in the contract and impossible to miss. They threw the dice and lost, just like any vacationer in Vegas, and they deserve the same personal remuneration any Vegas loser deserves.
Now, to point a way toward a remedy against this shit happening again, many exceptionally responsible sales organizations will typically charge back the commissions on accounts that go bad fully or partially to the commissioned selling agent.
Even though the buck fully belongs to the contract singing homeowner, this speculative madness on the part of renters who should have remained so was certainly exacerbated by brokers and other intermediaries who had nothing to lose by facilitating bad loans on to full monetarization. If every step along the way had been contractually forced to eat all or part of their taste of any potential loss, I can guarantee you they would not have slapped so many mirror-foggers into multi-hundred thousand dollar variable rate mortgates.
But as long as there are plenty of us out here who bought only the house we could afford, not what we “qualified” for, and bought both it and its maintenance costs within our reasonably foreseeable budgets, I’m not losing any sleep over those who foolishly believed magic would make them something they never were.