Progressive World Review

The Washington Post reports that the House passed a bill today aimed at helping at risk homeowners stave off foreclosure.  The plan would let borrowers trade their adjustable loans with sharply rising interest rates with more traditional and affordable loans backed by the federal government,

The House today approved an ambitious plan to rescue hundreds of thousands of homeowners at risk of foreclosure by helping them trade exotic loans with rapidly rising monthly payments for more affordable mortgages backed by the federal government.

To nobody’s surprise, Bush has threatened a veto and Republican leaders have criticized the bill as a “bailout for speculators and irresponsible borrowers.”

It’s funny how when a bank like Bear Stearns goes bust and needs their own bailout, you don’t hear the same outcry, not from the conservatives anyway.  While I have no doubt that many borrowers facing foreclosure truly are irresponsible, what does that say about those who loaned them money in the first place?  You would think that one of the largest banks on the planet would know enough about their business to be able to properly access risk.

It’s not that I don’t hold people responsible for taking out loans they couldn’t afford to pay back, but in many cases its understandable how it could happen.  Mostly what you’ll find are hard working people chasing after the American dream of home ownership.  A little naive perhaps, a little too trusting of all the happy talk, “don’t worry about the loan rate re-adjusting, by then your home will have increased in value and you’ll be able to refinance into a fixed rate loan.”  But unlike a lot of people, I find it easier to forgive stupidity than I do greed.  It was as if our entire financial system had broken down.  From loan brokers misleading clients and coaching them to lie on their applications, to Wall Street slicing and dicing mortgage backed securities to the point where nobody understood the risk anymore, every semblance of fiscal responsibility went out the window.  The borrowers, for the most part, were just trying to capture a little something they could call their own, something to show for a lifetime of hard work, while the financial “experts”, the ones who were supposed to know what they were doing, put our entire economy at risk just to add to their already fat wallets.

–Paul Wilden

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