The Case for Housing Help
Clearly, any good rescue legislation cannot be created in a stampede simply to make it look as if politicians are doing something. One thing for sure is that the government should steer clear of spending billions on buying already foreclosed homes. Why bail out the lenders who made the excessive mortgages in the first place? Any program must be carefully framed to avoid sticking the government with billions of dollars of additional losses. As a recent Financial Times article put it, "The prudent should not have to bear the cost of the profligate."
This crisis represents a major challenge to our political leadership. But to come up with the right programs, Congress should set up an advisory group made up of professionals in the world of mortgage finance and residential housing to ensure that programs are effective and fair to the public.
The basic thrust of the programs must be to protect homes from being foreclosed. When that happens and the houses are thrown on the market, they just compound the downward pressure on prices. The main focus, then, should be to protect certain home occupiers by helping them refinance their mortgages to make the debt service affordable. The natural question is: Why should the federal government bail out homeowners in a declining home market any more than it should bail out stock buyers in a declining stock market? The answer is: because the whole economy, including the stock market, turns on the housing crisis.
Many have opposed the use of public money to stabilize the situation. But the private sector has to date failed to stabilize the housing crisis, and time is running out. The first duty of the Federal Reserve and the financial regulators, and ultimately of the politicians, is to make sure the financial system doesn't collapse. Because if it does, the economy could go with it.
Reader Comments
DOING THE SAME THING AND EXPECTING DIFFERENT RESULTS
"...Congress should set up an advisory group made up of professionals in the world of mortgage finance and residential housing to ensure that programs are effective and fair to the public."
Aren't these the same people who screwed up the system in the first place? You think letting them have another time at bat is going to change the score of the ball game?
How about just doing nothing and let the terrible consequences follow? Let's see how the free market handles the problems created by the governmental controllers, even when it surely means great pain for those who deserve it and those who are innocent bystanders.
Isn't that how Capitalism is supposed to work?
My sister is in the situation and how do she get help
Please email me information to get my sister help with this issue. She does not have money to pay a lawyer so she need pro bono attorney.
not a solution
mr. zuckerman,
while your article made a sensible appeal to the common self interest, the reality of the situation is different. another government program to bail out the profligate, the foolish, and the greedy is not what this country needs. like all federal handouts any attempt to help a few unfortunates will be stampeded by thousands of con men, politically connected pinheads and other greedy people in search of easy money. one need only look at dozens of other misguided federal programs to see that personal stupidity and corporate greed cannot be legislated away. forcing prudent people once again to help fix the latest mess will only only encourage more fiscal irresponsibility in the future.
you can mark it on your calendar right now. if a federal mortgage bailout happens you can expect a timeline like this; one year to legislate, two years to implement and two years for the public to lose sight of it. a few months later a scandal and the next perp walk. some time at the end of 2013 we can be assured of yet another congressional investigation. i'll go heat up the popcorn.
advertisement
