The New York Times is running a story with a blaring headline, “As Housing Bill Evolves, Crisis Grows Deeper!” Well, surely the article shows how the Senate bailout bill will turn around the housing market… but it doesn’t. In fact, the article reports that expert after expert have come to the same conclusion: the bailout for Countrywide and other lenders won’t work.
While the proposed program would help some homeowners, analysts say it would touch only a small fraction of those in trouble — the Congressional Budget Office estimates it would be used by 400,000 borrowers — and would do little to bolster the housing market.
“It’s not enough, even in the best of circumstances,” said Mark Zandi, chief economist of Moody’s Economy.com…
“No matter how you fiddle with terms of their present situation, it’s not going to save the day” for many borrowers, said Bert Ely, a housing finance consultant based in Washington…
“In this rush to legislate and with the lack of discussion of a lot of issues, people will look at this bill in the winter and say we shouldn’t have done this, we shouldn’t have done that,” said Mr. Ely, who closely followed the savings and loan debacle…
An official for the Mortgage Bankers Association, a trade group in Washington, acknowledged that the proposal may not help the majority of troubled borrowers…
Nonetheless, the NYT article points to the rising number of people defaulting on their loans to argue for the bailout as a sign Congress is “doing something” about the problem. But, as the Heritage Foundation predicted months ago, the bailout bill itself may be the cause of the increase in past due loans. Heritage said in March that the Dodd bailout would ”threaten to disrupt and slow the private sector’s efforts to help troubled borrowers, because either borrowers or lenders may believe they could get taxpayer-subsidized terms under the new FHA-based arrangements when they do become available.”
The truly worrisome part of the NYT article is that while everyone is realizing the bailout is dud, liberals are using it as an excuse for more federal intrusion, not less. Barney Frank is quoted as saying a second bailout is likely needed.
Instead of recklessly tossing hundreds of billions of tax dollars at mortgage companies, the Senate should abandon this terrible bill and focus on policies that give Americans more money in their pocket to pay their bills:
- Cut taxes permanently;
- Drill for gas & oil to reduce energy costs; and
- Allow people to by cheaper health care plans from other states.
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