Housing Hoopla:
The Democrats’ $ 300 Billion Buyout of Problem Mortgages
By: Barbara Cubin
5/08/08
Bush Paulson Letter
Today’s House-passed reforms to H.R. 3221 asked the federal government to fund our economy’s current failing mortgages with $300 billion of taxpayer money. This legislation allows lending companies to insure their riskiest mortgages through a federally-backed program. If the borrowers default, the lenders will still get paid courtesy of the taxpayer.
Representative Cubin issued the following statement after the Democrats in the House of Representatives passed a housing market bail-out bill today:
“I have long contended that the federal government has absolutely no role in bailing out the bad, irresponsible choices individuals make. Back in March of this year, I joined my conservative colleagues in sending a letter to President Bush and the Secretary of the Treasury, Henry Paulson. Our letter expressed the continued opposition we have to a tax-payer funded bailout. My position on this matter has not changed, and is as strong as ever. As our letter stated, a tax-payer funded bailout creates a moral hazard encouraging both lenders and borrowers to take inappropriate risks in the future. Simply put, bailouts reward bad behavior and set a terrible precedent.
The reality is that the market is resilient, and we should let it work. In fact, it is already correcting itself. Beginning last summer the mortgage industry successfully reworked more than a million mortgages, and is currently reworking thousands more each month. This fact demonstrates that the market is responding and did so much faster than a new government program can. Having the government step in at all, and late at that, is a huge problem.
Of the $300 billion bailout, $35 million of it is set to go to a slush fund for trial lawyers presented as ‘grants to state and local legal organizations with experience in foreclosure law.’ This is particularly fishy when we learn that in the 2006 election cycle trial lawyers gave Democratic candidates $85 million. Looks like the House Democrats had a favor to return. I think most reasonable people can agree that trial lawyers create a lot more harm than good. Just look at the mess they have made with health-care. The buyout is unnecessary and ridiculous by itself, but when Democrats tack on provisions like money to trial lawyers and millions to unions and non-profits through the Affordable Housing Fund, the bill passed becomes even more troubling. And I thought that wasn’t possible.
Even though we debated this matter on the House floor, I still have not heard the Democrats answer this question: Why should Wyoming taxpayers pay to bailout reckless lenders and borrowers? Wyoming is one of the least affected states in the nation, and I cannot see a reason why we should punish those who behaved in a disciplined and responsible manner, and reward those who were irresponsible and made poor decisions.”
Representative Barbara Cubin |
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