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Thursday, August 23, 2007

Should We Bail Out People Who Made Poor Borrowing Choices?

Senator Charles Schumer says we should:

Sen. Charles Schumer urged federal regulators Wednesday to do more to help certain homeowners struggling to make mortgage payments.

The Democratic senator from New York made his plea in a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke - two men at the forefront of efforts to make sure the credit crunch that has rocked Wall Street doesn’t undermine the economy.

Schumer asked Paulson and Bernanke to support a plan in Congress to provide $100 million to nonprofit housing groups to help troubled subprime borrowers - those with blemished credit histories - refinance their homes.

Those borrowers have been hardest hit as interest rates have risen and home values have weakened. As a result, foreclosures and late payments have soared. The credit crunch, which started with these homeowners, has spread to other borrowers.

The problem is that a) that $100 million isn’t going to go far once those non-profit groups eat most of it up in administrative fees and b) giving people who make poor credit decisions money to bail them out is just going to delay the inevitable.  Giving these people money to get another mortgage that they likely will eventually not be able to pay off either isn’t going to help anyone. 

And it’s going to cost taxpayers $100 million.

There’s no government fix to the current woes in the housing sector.  Better to just ride it out than protract it with well-meaning but largely ineffectual band-aids.

Comments

When you bail out people for bad decisions you get more bad decisions from more people.

Ignoring that fact makes things worse for nearly all parties.


What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.


The Whistler's signature
The Whistler on August 23, 2007 at 10:04 am
Avatar for markm

Well Chuck is just a pandering wanker. Even he knows bailing these people out isn’t the answer. He’s just trolling for votes.

markm on August 23, 2007 at 10:10 am
Avatar for dallas

The government should give them a bargain fixed rate on a nice house in bagdad.  We send plenty of money over there anyway.

dallas on August 23, 2007 at 11:27 am

Maybe the lenders were the ones who made the bad choices???

Zsa Zsa on August 23, 2007 at 12:03 pm

Right ZZ:  And Schumer is probably a lot more worried about bailing out his campaign contributers more than the borrowers.


What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.


The Whistler's signature
The Whistler on August 23, 2007 at 12:13 pm

No doubt!

Zsa Zsa on August 23, 2007 at 12:14 pm

I think dubya should cut taxes again, that will put more money in the pockets of Americans and the economy will become super robust.
We are only in the second inning.
What about the $1.2 trillion worth of ARMs that will reset in the next 6 to 12 months and the ones after that? Should we bail them out too?


“We have a dollar that’s adjusting and I am for a strong dollar.....
Our dollar doesn’t buy as many barrels of oil as it used to and so therefore it’s more expensive for the American people”..... Bush 3/12/08

Mark D on August 23, 2007 at 02:09 pm
Avatar for Lestat

Should we bail out the banks that make these loans? 

Should we stop deregulating every industry that allows these type of con games?

Lestat on August 23, 2007 at 04:11 pm
Rob
Rob
17913 comments
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Should we bail out the banks that make these loans?

No.  Again, we shouldn’t be subsidizing bad choices.

Should we stop deregulating every industry that allows these type of con games?

I’m not sure what your point is, but generally speaking we should deregulate all industries as much as possible.  Keeping in mind, of course, that a certain level of regulation is necessary to maintain law and order.


When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

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Rob on August 23, 2007 at 04:30 pm

Lestat - Should we stop deregulating every industry that allows these type of con games?

What con games? What are you talking about?

likwidshoe on August 24, 2007 at 06:12 am
Avatar for Stop bail out

I have always support Hillary and Dem. But she is supporting bailing out. Oh my god! how stupid? Finally she have shown me how stupid she is. I cant trust this kind of people to run the country. I dont have all the money to give to those greedy people. Why waste my tax $ on it. My tax should be use for something like education or research. From now on until election in 2008, I will make sure Dem. get ZERO vote from my family and 5 votes for Rep.

Stop bail out on September 10, 2007 at 12:40 am
Avatar for Jaye

Oh yes we should certainly reward the people who made bad choices.  So what if everything was explained to them, or perhaps they fudged a bit on their imcome to qualify for the “pie in the sky” american home of 3000 square feet.
Why make someone pay for their bad decisions when they can suck at the teat of the U.S. Government.  Certainly let’s not penalize any lending institutions that helped drive an artificialy enhanced housing market.  Is it not every person’s given right according to the constitution to live over their means and then get bailed out?  The heck with people who saved many years to accrue a down payment and then bought a home that could be aforded within a budget.  Free Lunch, Free Lunch. why not pay for everyone’s free lunch?
It’s our way to bail out stupid, lying, people who want to work the system.  After all we’ve done that for every politician’s friends forever.  Geez, I cry every night for those people who knew they had a mortgage payment due some day of $4,000 when they only net $3,000 a month.

Jaye on December 5, 2007 at 02:51 pm
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