Dems: Don’t Forget Homeowners with $700 Billion Bailout Plan
The political maneuvers have begun. Rather than just shoving the $700 billion bailout plan through like the Treasury and the rest of the Bush Administration wants, some members of Congress are asking some questions about what the bailout does.
Should it just be for Wall Street? Is there any reason that others can’t get the good effects, too? Perhaps homeowners should be able to get in on the action.
That’s just the argument BloggingStocks offers:
For one thing, people would not have gotten mortgages for homes that they could not afford if the banks did not issue them. Lending standards were so lax that they bordered on the criminally negligent. That’s why it seems horrendously unfair to rescue banks and leave homeowners to fend for themselves. Remember, it takes a village to raise a child and a borrower and a lender to make a mortgage.
What the “let them eat cake” crowd often forgets is that shady mortgage brokers would push people into high-cost adjustable-rate mortgages even if they qualified for a standard 30-year loan. Exactly how many people fit into this category is not clear, but banks need to be held accountable for the lives they have ruined.
Of course, the flip side is to rescue no one from this mess.
While it is tempting to let the “free market” run its course, the problem is that we haven’t really had a free market for decades. It’s slowly become a bit socialized. (And with this bailout we’ve reached the points of almost completely socialized risk.) And the other problem is that there are plenty of other industries (not just finances) that would be affected if Wall Street completely and utterly failed. Letting “market forces” fix this might devastate everyone rather quickly.
But bailing everyone out might do the same thing: devastate everyone. This would be devastation throught the increased national deficit, the need for higher taxes and a general drag on the economy. But perhaps in the bailout scenario the pain goes on longer and we learn nothing, while in the “market forces” scenario the immediate impact is huger and we change our ways.
I don’t know the answer.
But I do know that it seems hypocritical and monstrously unfair to help those with golden parachutes get a cushion from their poor choices, while doing nothing for those without the same sorts of resources.
Tags: homeowners, $700 billion bailout, home mortgage loan, mortgage loan blog,
golden parachutes, Wall Street
