At last night’s debate, Senator McCain floated a horrible idea: to have the government buy up bad mortgages and then write off part of the mortgage and reduce the interest rate so that delinquent borrowers can afford to keep living in their pricey homes. During the debate, Senator Obama seemed to agree with this stupid idea, pointing with approval to the fact that the bailout bills he supported already permit this to a limited extent. His only objection seemed to be that McCain was hogging credit for this awful proposal for himself. However, Obama later raised concerns about the cost to taxpayers of McCain’s proposal.
Michelle Malkin explains why this is a terrible idea.
Having the taxpayers buy up bad loans, and write part of them off, forces homeowners who bought small houses and lived within their means to effectively pay the mortgages of those who bought large houses and can’t afford them.
I and my family live in a 60-year-old, two-bedroom house with a tiny kitchen, peeling paint, creaky floors, obsolete plumbing that backs up, and ancient electrical outlets. My wife hates the house. I could have purchased a beautiful new four-bedroom house less than a mile away, but that would have prevented me from getting the 5 percent rate fixed-rate mortgage and affordable monthly payments that I ended up with.
I will now be forced to pay the mortgages of people with 5 bedroom houses, beautiful granite countertops, two-car garages, hot-tubs, and swimming pools, who are unable to afford their adjustable-rate mortgage now that interest rates have risen.
They can’t afford their mortgage, so the government thinks they need help, to rescue them from their recklessness.
I can afford to pay my mortgage, so the government will make me pay for my prudence.
Reckless lending and borrowing has been rewarded, planting the seeds of future financial crises.
And it’s not as if any pressing human need is at stake: even if they lose their homes, irresponsible borrowers will still live better than most Europeans. Even Americans who live below the poverty line often live better, and in larger homes, than most middle-class Europeans.