|
Elphaba, I have read the article in the original post a few times now and what it suggests is that Bush has a plan to freeze mortgage rates for some of the borrowers that are being effected by the raising rates.
The articles suggests there are three types of borrowers:
1) Those that have strong credit and will be encouraged to move their loans to more affordable loans offered under the Federal Housing Administration (read: take your variable rate mortgage and lock it in at a fixed rate).
2) Those that do not have the credit or the resources to make payments. They will lose their homes and return to the rental market (read: probably should never have taken on a mortgage to begin with -- bad debt).
3) Those who have reasonably good credit but can't afford their mortgage given the new rates. This group qualifies to have their interest rates capped for five years (read: group that got screwed because they either didn't understand what a variable rate mortgage was, or are living slightly beyond their means).
Bush is essentially bailing out both the consumers that have taken on a mortgage they can't afford AND giving a break to the corporations that wrote the bad debt to begin with (as I pointed out above, if this group were to default on their loans, the write down would be significant, when added to the second group). He is doing this because, "Rising defaults on U.S. subprime loans, aimed at borrowers with a spotty credit history, have spooked financial markets around the globe in recent months, tightening credit conditions and threatening to derail the U.S. economy."
This is bigger than just some Bush cronies or some fat cats around a boardroom table. These businesses fucked up. They wrote a lot of bad debt... enough to effect the US and International economies. It's not a pretty picture.
I am suggesting that on the spectrum between an absolute free market and and absolutely controlled market, Bush's program here is more socialist than neoliberalist. I am not, you should note, commenting on his actions or inactions revolving around the sale of these mortgages to begin with. That would be another discussion.
No good neoliberalist would meddle like this. They would let the market decide what should happen to the people who are losing their houses and to the businesses that wrote so much bad debt.
__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke
|