Congress Will Force Bush to Accept Housing Bailout
Will President Bush go for a housing bailout? In both his speech to the Economic Club of New York on Friday and, later that day, a televised interview with CNBC's Lawrence Kudlow, the president stopped short of ruling out such a move, though he was critical of the idea. Yet the more folks I talk to in Washington, the more likely it seems to me that the White House will, in the end, support a proposal quite similar to the one being pushed by Democrat Barney Frank in the House. As one former member of the Bush economic team put it: "I do think the odds of enactment have increased and will continue to increase as the economy worsens." Republicans in Congress, up for re-election unlike Bush, may force his hand. Read this new analysis from Daniel Clifton over at Strategas Research (boldface mine):
President Bush traveled to New York on Friday and the main takeaway we received from his speech is that he vehemently opposes Congressional Democrats' efforts to increase the government's role in the housing market. More specifically, Bush made clear his priority was to prevent as many people from losing their homes and will thus oppose legislation authorizing the government to purchase troubled mortgages. And he reiterated and increased his opposition to bankruptcy judges modifying mortgage products for homeowners in bankruptcy. If the credit/market situation continues to deteriorate, at some point, Republican members of Congress will seek to do something and force the Administration to compromise with the Democratic leadership.
Bush publicly bristles at the idea of a bailout—using taxpayer dollars to help make whole the people or institutions that made bad financial decisions. And analyst Jaret Seiberg of the Stanford Group, an institutional research firm, says any bill framed as a bailout is "dead on arrival." But, he adds, the Frank bill does force borrowers, servicers, and homeowners to de facto pay for the rescue, since lenders will be accepting a reduced payment and homeowners will both pay an insurance premium on their new mortgage and forfeit a portion of the profit to Uncle Sam when the house is eventually sold.
But action is far from assured. Economist Alan Viard, who worked for Bush's Council of Economic Advisers, says the administration "will be reluctant to approve anything" like the Frank bill unless the economic situation deteriorates significantly from here.
Tags: Congress | George W. Bush | housing market
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Reader Comments
Whatever
Bush and his cronies caused this mahem. I say we impeach them and put them in prison for all the crimes they've commited against humanity. This will set a precident by the American people that we will NOT tolerate this from anyone, even if you are the president.
NO BAIL OUT....
I saw the adjustable rate loans...I was approached many times to buy into it....I DID NOT!!...Why.....BECAUSE I HAVE A BRAIN.... I REFUSE ANY BAIL OUT OF ANYONE THAT SIGNED A LOAN THEY COULDNT AFFORD....IF INDIVIDUALS ARE HEADING FOR FORCLOSURE, THEN FORCLOSE AND GET IT OVER WITH...SO OTHERS '' WITH BRAINS''' CAN BUY THE FORCLOSED HOMES.
Bailout?
Their was no bail out of Bear Stearns. In case you missed it they were trading at a 20 billion market cap at fridays close and were sold last night for $256 million. When you don't know what you talking about, it's time to sit down and shut up.
I guess you would have been happy if every investor with money at Bear Stearns lost their life"s fortune also? Then we would have seen a run on every other investment house in this country, then another great depression. Is that what you want? Then of course you could really whine. The fed loaned JPM money for 30 days, that's why the fed was created, should we now disband them?
It's a bailout, moron!
Bail out in economics and finance is a term used to describe a situation where a bankrupt or nearly bankrupt entity, such as a corporation or a bank, is given a fresh injection of liquidity, in order to meet its short term obligations. Often bail outs are by governments, or by consortia of investors who demand control over the entity as the price for injecting funds.
Often a bail out is in response to a short term cash flow crunch, where an entity with illiquid, but sufficient, assets is given funds to "tide it over" until short term problems are resolved. However, often bail outs are merely delaying the inevitable, as a government or investment structure attempts to avoid putting a large quantity of illiquid assets on the market, which would force other similar entities to write down their assets.
Following a March 14, 2008 announcement that the firm required emergency financing from the Federal Reserve Bank of New York and JPMorgan Chase in order to avoid insolvency, Bear Stearns stock price suffered a precipitous decline, with its market capitalization dropping by 47%, from $57 per share to $30 per share by the end of the day. On March 16, the firm agreed to be acquired by JPMorgan Chase for $236 million (approximately $2 per share).[2] Among Bear Stearns' assets most desired by JPMorgan are its prime brokerage unit and the firm's midtown Manhattan office tower
Bailout for the stupid, lazy and greedy?
Why should I be forced to pay for the stupidity, laziness or greed of those about to default? I had no say in their poor decisions nor would they have listened if I did.
The government is ultimately responsible for this mess because it used its regulation and taxation powers to create the conditions for it to occur. The greedy, stupid, and lazy underclass of Americans then happily finished its "law of unintended consequences" part.
Punish the lenders too
I agree with most of the commenters that defaulting homeowners should NOT be bailed out. They made bad decisions and should live with the consequences.
Still, it's not 100% their fault. There are a lot of unscrupulous lenders out there who made money conning these fools into buying homes they couldn't afford. Those people should be punished too. At the very least, there should be more public oversight into home lending.
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Simon9265@yahoo.com
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hypocrit
So, it is ok to bail out bear stearnes, but not ok to bailout the consumer? If we want to end welfare, we should also end corporate welfar!!!!!
Mar 17, 2008 17:23:55 PM [permalink] [report comment]