On the Hook

If there is anything that would inspire me to renew my posting, another nail in the coffin of liberty would sure do it. And the nail was certainly hammered home this week, with the House passing (by a disturbingly wide margin) legislation aimed at "rescuing" those borrowers of unaffordable home loans whose irresponsibility got the best of them. American taxpayers could be on the hook for upwards of $300 billion dollars under the proposed legislation, which was packaged together with federal backstop funding for mortgage giants Fannie Mae and Freddie Mac to ensure passage.

You can read about the particulars of the bill here.

As for my thoughts on this disgrace:

Our leaders in Washington are spineless. They seem to have no problem with offering hundreds of billions of our tax dollars to reward the small percentage of individuals who made bad financial decisions in taking out loans that they could not afford. It is inflation, tighter lending, and the inevitable falling of home prices that lie at the heart of our current economic troubles. This legislation, at least as it pertains to bailing out homeowners, does nothing to address those underlying problems. Home prices will continue to fall, inflation will continue to soar, and lending will continue to tighten regardless of how many homeowners are “saved” from their own incompetence. The only thing that the FHA provision of this bill does is put those of us who made wise decisions on the hook to the potential tune of $300 billion dollars.

What makes it even more disturbing is that a truly necessary provision (the backstopping of Freddie and Fannie) was packaged with the initial bailout bill to force the passage of both. Like the homeowner “rescue” provision, the backstopping of Freddie and Fannie is a symptom of this nation’s growing reliance on the federal government. If these two giants were never given implicit government backing in the first place, they would never have grown so large and unregulated, and in turn, their failure would not have proven so potentially catastrophic to the overall financial system.

Yet unlike the bailout of reckless borrowers, this provision IS necessary to address one of the underlying causes of our economic troubles, by preventing further tightening in the credit markets. It is a shame that in order to pass this necessary provision, American taxpayers were forced to cough up billions of unnecessary dollars to reward irresponsible borrowing that will have no effect on the economy at large.

This is just another disturbing reminder of the death of individual responsibility in this country and the despotic growth of the federal government. I may not be surprised by this one, but I sure as hell am saddened by it.