By JLP | September 25, 2008
This comes to us from Hillary Clinton’s editorial, Let’s Keep People in Their Homes, that was in today’s Wall Street Journal:
…we must address the skyrocketing rates of mortgage defaults and foreclosures that have buffeted the economy and ignited the credit crisis. Two million homeowners carry mortgages worth more than their homes. They hold $3 trillion in mortgage debt. Nearly three million adjustable-rate mortgages are scheduled for a rate increase in the next two years. Another wave of foreclosures looms.
I’ve proposed a new Home Owners’ Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We’ve got to stem the tide of failing mortgages and give the markets time to recover.
This is why the bailout for the banks, brokerages, and mortgage firms bugs me so much: it fuels the argument that we need to help people afford the unaffordable since we helped Wall Street. I am against a bailout of any kind—damn the consequences. There is no reason to believe that these companies will change their ways just as there is no reason to believe that these homeowners (a really bad term since they don’t really own anything) won’t again run into trouble. What then? Do we come to the rescue with another dose of help?
The solution to all this is really simple: we need to return to responsibilty and standards for both companies and citizens.