The Housing Chronicles Blog: Backlash against housing bailout continues to grow

Saturday, April 26, 2008

Backlash against housing bailout continues to grow

Ever since the issue of sub-prime and Option ARM loans arose to lead the housing market into its historic crash, I've been asking the simple question, "Why would someone sign something they didn't read or understand?" One common reply is, "Well, not everyone's like you, some people simply relied on their brokers and agents to explain it to them."

Fine. But there's a growing consensus among the anti-bailout crowd that you can't claim to be a responsible adult in the U.S. today and not read what you sign. From a story at CNNMoney:

Why should American taxpayers have to pay to bailout reckless lenders and borrowers?

The website Angryrenter.com, launched just last week, has a vitiation demanding that Congress not pass any bailout programs that reward risky borrowing and lending. To wit: "Let the free market sort it out!"

The petition is gathering 40 to 50 signatures per hour, according to spokesman Adam Brandon, who adds that the site is already getting 15,000 visitors a day...

"A third of the American public rents," Brandon pointed out. "They're saying 'I've been saving for a mortgage for years. I could have jumped in on a subprime loan too. Now I'm going to have to pay for a government bailout."...

Many CNNMoney.com readers agree, expressing outrage at the idea of seeing their taxes used to keep people in homes they never should have purchased...

Many people would prefer the government do nothing at all to prop up the housing market -- especially those hoping to buy in a more affordable market.

Patrick Killelea has been blogging about the housing bubble at Patrick.net for four years from San Francisco, where it takes a not-so-small fortune to buy.

"Bailouts reward bad behavior. I've been diligently saving, denying myself lots of things so I can afford to buy, yet the government is saying we have to keep all these people in their homes," said the Web site programmer and author. "Well, wait a minute! Why can't I spend more than I can afford and have the government bail me out."...

StoptheHousingBailout.com is another newly minted site devoted to the bailout backlash. "I just got really angry," said blogger Morgan Ward Doran, an L.A.-based attorney who isn't professional involved with the housing industry. "Everyone I hear from is against the bailouts."

Doran argues that lenders, brokers and home builders all made huge profits by overbuilding houses pushing through poorly underwriten loans, and now they want taxpayers to cushion their fall.

Indeed, there is a provision in the Senate bailout bill that would give extensive tax breaks to home builders, which has some people especially incensed...

Most people who are against bailouts trust the market more than the government.

The fastest way to return to normalcy is to let the market work, according to Angryrenter.com's Adam Brandon. He acknowledges that the impact on some homeowners will be devastating, but that things will get even more painful if we don't let the free market work its magic.

"I feel terrible for people losing their homes," said Brandon, "but the sooner we let the market sort this out, the sooner we can get back to growth. When the government gets involved, it can delay the inevitable."

1 comment:

Anonymous said...

The profit $1.8 billion in interest payments on the first set of bank loans that were repaid, from Obama Bailout is a good indication that the plan is working. That figure is according to news last June 10, 2009.