Monday, September 29, 2008

A Thought on the Bailout

According to the Times: "To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes."

Try? The government will try?

Let's be clearer about this. It's the government. The government could have long ago directed all lenders to renegotiate terms with struggling borrowers and the government would not have had to take over the loans to do so. Regulating credit is the government's job.

Now, the government has taken over the loans. It could forgive all of the debt if it wanted. That wouldn't be smart, but it can certainly succeed in renegotiating terms on most of this debt. It is, in effect, the lender now and if your lender wants to reduce fees and interest rates or forgive penalties, the lender can. The government has to do everything possible not to foreclose on its own taxpayers.

Try is not good enough. The government must bee expected to vigorously pursue this part of the plan.

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At 6:34 PM , Blogger J said...

This comment has been removed by the author.

At 6:36 PM , Blogger Jon E. said...

I have some even more fundamental questions about these putative plans to help homeowners:

1) What, are we out of debtors' prisons?

2) What about workhouses? What happened to those?

3) Did something happen to the recent bankruptcy law?

4) Why are we worried about foreclosure? If we're lucky, this only starts with foreclosure. Next comes death, especially among surplus seniors, which will only cut down on Medicare and Social Security payments. Win-win, methinks.

Seriously, everybody's got their panties in a bunch on this one, and I just don't get it.


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