More On The Bailout
Dec 16th, 2007 @ 6:23 PM by Alden Smith
The Bush plan to help hurting homeowners has made strides in the landscape of the mortgage crisis, with approval of voluntary freezes on mortgages that qualify for the plan. From the guidelines, it appears not too many people will be able to do that. With an estimated 1.8 million sub prime mortgages ready to reset in upcoming months, the mortgage industry will see hard times, along with sub prime homeowners. They could see their mortgage payments increase as much as 30%. To me, the key word here is “voluntary.”
The current administration has always preached free trade to foreign countries that are in dire straits, and it seems that the whole scenario has come home to roost. U.S. Treasury Secretary Henry Paulson Jr is working with lenders and investors to try to stem the tide. However, opposition to this is forthcoming. Congressman Paul Kanjorski, D-11, among others, opposes the bailout. A lot of private citizens feel the same way.
Kanjorski said “What you really have is the private sector coming to fix the problem. The last time I heard, that’s what we call capitalism – at your own risk. They weren’t going to give us any of the profits on the transactions.” To me, this has a very real ring of truth. Banks and lenders knew they were gambling on people with less than perfect credit, yet still took the plunge, and now are in the position to really lose a big chunk of change. And the people with this kind of mortgage will lose in the process.
It is hard to understand why this has been allowed to happen. Surely, the people making these loans knew the risk involved. Tales of fraud included jacking up people’s income to justify these loans, and to me that is downright criminal. Yet it happened until we are seeing the crisis evolve.
A lot of people think that everyone – bankers, investors, sub prime homeowners – should take their lumps and learn a lesson. The damage to the economy is unpredictable, yet we know for sure it will happen. Some say a recession is looming. Others preach that it is our obligation to help these people out. Whoever is right, it remains to be seen just what course this all will take. It should be an interesting ride.