Bail Out Harms Responsible Homeowners

As you know a massive government bailout was passed with the goal of saving the economy. The Oct. 4, 2008 front page headlines in the SJR "Bailout is coming, but will it work?" Good question. In my opinion the headline should have been "Bailout coming, was it necessary?"

The bailout represents much more than the $857 billion dollars of your tax money pledged to be spent to save the economy. Once again irresponsible earmarks were attached to the plan to bribe congressmen to change their votes. Rum distilleries in the Virgin Islands get $20 million, wooden arrow makers get $8 million, and corporations get a $300 per employee write off for employees that ride bikes to work.

The pilfering of the treasury for these earmarks is not what I'm referring to. Read the last paragraph quoting Barney Frank in the article. To quote: "Congress will tackle next year; overhauling housing policy and financial regulation in a legislative effort compared to the New Deal". Welcome ladies and gentlemen to America's new and improved socialized housing market.

Reported so far is a homeowners protection clause, that will establish an expanded bureaucracy to help people in foreclosure save their homes. In other words a bureaucrat will tell banks to adjust interest rates, and lower principal on loans. The bill also gives bankruptcy judges the same power.

Ninety five percent of Americans pay their mortgages on time. What this bill does is to reward people for defaulting on their mortgages, with paying down their principal with your tax dollars, and giving better rates than responsible mortgage payers can receive. In the name of helping an infinitesimal number of homeowners defrauded by predatory lenders, this bill throws out the baby with the bath water.

Do you think rewarding bad behavior will encourage or discourage more bad behavior? Hey, I don't have to pay my mortgage, I'll just go to the local housing administrator and he'll have the evil bank that locked me in the basement and beat me with a rubber hose until I signed a mortgage I couldn't afford, reduce what I owe and lower my interest rate. Hey I might even end up with some extra beer money with the lower payment. Before you decide to stop paying your mortgage in hopes of the housing administrator shaking down your bank, you'd better be sure your political affiliation matches the administrators!

Was this bill necessary? In my opinion, no. If the financial markets were in such bad shape why are Citigroup and Wells Fargo fighting over Wachcovia? Why did Warren Buffet invest billions in Goldman Sachs, Why did Bank of America buy WashMu? In other words there were strong companies, and weak companies. The market would have sorted this all out without government intervention spending hundreds of billions of your tax dollars.

Why the crisis? Why the rush? Could it be because the government caused this mess? Absolutely. Investor's Business Daily has chronicled the genesis of the meltdown. What you are paying for in this bailout is a failed social engineering project. In an attempt to get as many low income families mortgages, the government created this mess.

Mix in a helping of corruption, and fraud at the governmental political plumbs called Fannie-Mae and Freddie Mac and you have the perfect storm. Hundreds of millions of dollars were paid to political operatives with no mortgage lending backgrounds to manage these entities. Millions of dollars were made in campaign contributions by Fannie Mae. The very politicians in charge of oversight were bought off. Those that ran Fannie Mae and headed the oversight committees should be investigated for fraud.

What happens? The very ones responsible for this fraud carried out against you the taxpayer, are now going to be in charge of the financial markets, and housing markets "New Deal" legislation. God help us all.

The American housing market was socialized by the bail out. What will happen to the value of your home as a result? Probably not much for the short term, however when banks are ordered by bankruptcy judges, and local housing administrators to take losses so people can keep their homes, those losses will be made up elsewhere. Namely higher profit margins to absorb potential losses. In other words, higher payments for the responsible home owner.

What other negative consequences will you as a homeowner suffer as the result of this government action? Only time will tell, but big brother will have a say. Should treasury flood the market with properties purchased through this bail out, time to recovery in the housing market will be extended.

It is my hope and prayer that every congressman, and senator that voted for this ill advised bill be voted out of office. It is tragic that both presidential candidates voted for government intervention into the free market.

In the name of saving the economy, the government is now imposing itself upon one of America's most valued liberties, home ownership.

Wait a couple years comrade and I'll see you at the commune!