Is Anyone In Favor Of A Government Bailout?
Just like the Airlines in early 2000, it seems that most big lenders are counting on a big government bailout to get out of debt. Unfortunately, it appears that the US government is quite eager to press forward with wasting tax dollars to help lenders that made bad loans.
Reggie Middleton blogs:
If the government really wishes to get involved, they should go after those who were victimized through being fraudulently induced into applying for mortgages and home sales that weren’t in their best interest. Make the perpetrators of that fraud make the victim whole, which takes no government funding (many of the perpetrators themselves may need funding, though). Fraud was prevalent in the boom, but unilateral fraud on the part of the vendor is where the government should focus its resources. The market should be allowed to sort out the rest.
For more on the ill thought out consequences of this plan: “I hate to say it, but this thing is going to be ugly, and we are a good 2-3 years from even thinking about the bottom. We finally started reaching critical mass with ’subprime’ foreclosures, but we haven’t even begun to hit the alt-a and a-paper sham loans. They are starting to pop up, but they will take longer. Most alt-a and a-paper borrowers were doing 5, 7, and even 10 year ARM loans.”
One of the keys to a working capitalist society is a laissez faire approach. Choosing to bail out lenders will not end well.
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