The House passed two bills attempting to rehabilitate the housing and mortgage market this week. There doesn’t seem to be any shortage of criticism and blame for the bad decisions, and rightly so. Lenders and banks do share much of the blame for the overheated market. Lending standards were relaxed, or even abandoned altogether, creating an exaggerated pool of homebuyers that led to ballooning home prices that many, especially real estate investors, expected to continue forever. Now that the bubble has burst, the losses are staggering.
However, many in Washington fail to realize it was government intervention that brought on the current economic malaise in the first place. The Federal Reserve’s artificially low interest rates created the loose, easy credit that ignited a voracious appetite in the banks for borrowers. People made these lending and buying decisions based on market conditions that were wildly manipulated by government. But part of sound financial management should be recognizing untenable or falsified economic conditions and adjusting risk accordingly. Many banks failed to do that and are now looking to taxpayers to pick up the pieces. This is wrong-headed and unfair, but Congress is attempting to do it anyway.
These housing bills address the crisis in exactly the wrong way, by seeking to hide the problem with more disastrous government bail-outs and interventions. One measure, HR 5830 the Federal Housing Administration (FHA) Housing Stabilization and Homeowner Retention Act would allow the FHA to guarantee as much as $300 billion worth of refinanced home loans for those facing threat of foreclosure. HR 5818 the Neighborhood Stabilization Act, would provide $15 billion in loans and grants to localities to purchase and renovate foreclosed homes with the object of then selling or renting out those homes. Thankfully, President Bush has vowed to veto both of these bills. It is neither morally right nor fiscally wise to socialize private losses in this way.
The solution is for government to stop micromanaging the economy and let the market adjust, as painful as that will be for some. We should not force taxpayers, including renters and more frugal homeowners, to switch places with the speculators and take on those same risks that bankrupted them. It is a terrible idea to spread the financial crisis any wider or deeper than it already is, and to prolong the agony years into the future. Socializing the losses now will only create more unintended consequences that will give new excuses for further government interventions in the future. This is how government grows – by claiming to correct the mistakes it earlier created, all the while constantly shaking down the taxpayer. The market needs a chance to correct itself, and Congress needs to avoid making the situation worse by pretending to ride to the rescue.
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I would like to see Ron Paul address the fact that New York AG Andrew Cumo has effectively cut a back room deal on behalf of the federal goverment to the GSE’s Fanni Mae and Freddie Mac. They were arm twisted into a deal with Cumo that will essentially allo wthem to escape investigation. I am a real estate appraiser and i strongly beleive that the agreement, known as the Home Valuation Code of Conduct (HVCC), will destroy the independant fee appraisers out there. We are approximately 80,000 people mainly small business entities. In fact many of us are so small that our offices have only the appraiser as the only employee in the business. In my case it i smyself, my wife and four others that work within my firm. All of are middle class citizens. This agreement will allow appraisal management companies (AMC’s) to continue to do what the mortgage companies have been doing: pressuring the appraisers to make inflated reports.
I have emailed 5 congressmen, my Govenor and I have only gotten somewhere with 1 congressman, Randy Forbes. The people that run Fannie and the other GSE’s belong in jail for the things they have allowed to happen. AMC’s should be required to be licensed an held to strict regulations, just like appraisers are. Loan Officers and, and loan processors should have federally mandated licensure requirements.
I have been a part of a group head up my George Dodd, another well respected appraiser, to help with a proposal that is one that would let appraisers be involved with a solution. Instead we are being ignored. Our solution was one that would allow individual people police and regulate ourselves rather than make the goverment spend more money. Instead they are going to allow the fox to watch the hen house.
I would love to see someone do the right thing and bring this up on a level that would actually let the public know what is going on. Every media outlook i have turned to has ignored us. From newspaper columnist to TV media, it is deemed unimportant to the establish their ratings. we have been locked out, and as small businesses, we support an enormous segment of the economy both in what we do, and the fact that we are part of and estimated 6 Billion dollars in fee work a year. The AMC’s will be allowed to send work to the lowest bidders, which bid low due to their willingness to cut corners and not do their due diligence.
I would be happy to share ebery thing I have to allow Ron Paul the chance to see what we are dealing with.
Woody Fincham
Certified Real Appraiser
Virginia Beach, VA
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Either run as an Independent or shut up. We’re stuck with three hideous candidates. The only way you can win is running as an independent..and you could actually win. I’d vote for you. Just end your republican run and go Independent!!
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http://blog.washingtonpost.com/capitol-briefing/2008/05/barr_has_been_spending_freely.html
Barr Has Been Spending Freely
Former GOP Rep. Bob Barr (Ga.) announced his candidacy for the Libertarian Party’s presidential nomination today, saying that Americans deserved a choice beyond what the Democratic and Republican candidates can offer.
But if Barr really is disillusioned with the two major parties, he hasn’t shown it with his wallet.
Barr, who helped manage President Clinton’s impeachment in 1998 and then lost his House seat following redistricting in 2002, nominally quit the Republican party in December 2006. Barr said at the time that the direction of the GOP had been “bothering me for quite some time” and called himself a “proud, card-carrying Libertarian.”
Since then, Barr has continued to exercise his inherent right to dole out campaign cash, and his political action committee — now known as the Bob Barr Leadership Fund — has contributed money to roughly two-dozen Republican members of Congress, according to Federal Election Commission records. Recipients of Barr’s largess have included some decidedly moderate, non-Libertarian types like GOP Reps. Christopher Shays (Conn.) and Deborah Pryce (Ohio) and Sen. Norm Coleman (Minn.).
Barr also gave $1,000 last year to the presidential effort of a former Libertarian nominee, Rep. Ron Paul (R-Texas), just a few weeks after he gave money to another White House campaign — that of former Virginia Gov. Jim Gilmore, who is now running for Senate. Further complicating Barr’s post-partisan (or bipartisan? tripartisan?) stance, his last recorded PAC contribution, made in February, went to … a Democrat: Rep. Tom Allen, a candidate for Senate in Maine.
Of course, Barr’s PAC has also given at least $8,500 to the Libertarian National Committee. So he’s got almost all of his bases covered. As of March 31, his committee still had $166,000 on hand. Maybe he’ll throw some cash the Green Party’s way, just to be fair.
By Ben Pershing | May 12, 2008; 5:00 PM ET
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