Stop theSubprime Housing Bailout
Under proposed bailouts, responsible peoplelose and have to give their money to gamblers and liars. It doesn't matter if you have been dutifully paying your monthlyfixed-rate mortgage. Congress isproposing to make it your job to pay up for others' irresponsibility and lies.
Politicians will exploit your emotions by saying they want to help people "keep their homes". But remember that the people in financial trouble already had houses. They got into this mess by trying to buy bigger and fancier houses than they could afford. If we do help them, it should involve them moving back into houses they can afford. No one will be out on the street. Anyone who could pay a mortgage can pay rent, which is much less.
How about requiring bailout participants to prove that they did not lie on their loan applications? We could start by reporting undocumented "stated income" from loan applications to the IRS.
Will the special aid package be indefinite? Can I go tomorrow and get a loan for a house I can't afford, and then in two years when the rates reset, will I also be eligible for free mortgage payments? Should speculators get preference above citizens who have been saving rather than borrowing? What message does that send about responsibility?
The proposed bailout is a moral hazard. It encourages the bad behavior that got us into this mess, because the punishment for foolish borrowing is applied to you and not to the people who made the bad decisions.