The Campaign Spot at NRO reminds us what is now part of The Obamamessiah’s standard stump speech:
The top mortgage lenders spend $185 million lobbying Congress, and we wonder why Washington looked the other way when they were tricking families into buying homes they couldn’t afford.
Tricking them? Has anyone who has gone through the mortgage process knows (and as Jim Geraghty notes as well) it takes hours to go through all the documentation and sign everything. That’s tricking someone?
These are supposed to be legal adults with the ability to freely enter into contracts – legally binding obligations. They knew that getting a mortgage with absolutely no money down was a risk. They knew that trying to buy a house and only being able to afford and interest-only loan is about as financially risky a more as a person could take. They were all betting on the fact that “the good times will roll forever”. The people “buying” the house (pretty much renting with the hope of getting some money out in a couple of years when they could flip it), the people originating the mortgage, the companies packaging the mortgages into complex debt obligations , the fund managers clamoring for something that paid them more than the 1% they could get from money funds – all these people were betting on something happening that didn’t.
But let’s do a little thought experiment. What if the merry-go-round were still functioning today? House prices in the Democratic Communist People’s Republics on the coasts were soaring at 20% a year, the money for mortgages was flying in to those NINJA (no income, no job, no assest) loans, the weasels in government were getting their big tax cuts from increased sales and increased property values. What if all that were still going on? Would the government be justified to jump in and say “its all our free money that’s fueling this – we need to get an extra 10% cut on every house sale for the next three years”? Think that sort of “government intervention” in the markets would be welcomed?
Of course it wouldn’t. But then why all the clamor for taxpayers to give even more money to this set of complete fiscal boobs?