Housing Bailout Backlash

The Wall Street Journal is reporting Democrats Face Rescue Backlash.

Democrats may be risking a backlash at the polls in November by pushing hard to use taxpayer money to rescue homeowners who can no longer afford their mortgages in the face of stiff resistance from President Bush and many other Republicans.

The Democrats in Congress and the party's presidential candidates frame the issue as doing at least as much for beleaguered homeowners as the government is doing for Wall Street. The White house and most House Republicans counter this amounts to using taxpayer money to reward bad behavior.

The Republican protests are striking a chord with some Americans who are paying their mortgages on time or who didn't buy more house than they can afford.

President Bush is vowing to veto a bill the House passed last week -- with the support of 39 Republicans, about a fifth of their ranks -- that would, among other things, allow certain homeowners to refinance loans through a government agency if their lenders agree to take less than the full amount borrowed.

Keith Hennessey, a top economic-policy adviser to President Bush, says "gut-level public opinion" backs the White House. The reaction of people who are making mortgage payments on time, he says, is: "Hey, wait a second, why are you helping him when I'm making hard choices every single month to stay current on my mortgage?"

The line was drawn sharply in last week's House debate. Rep. Tom Feeney (R., Fla.) said less than 1% of homeowners would get help while the rest "will pay the price of this bill."

Rep. Barney Frank (D., Mass.), who wrote the legislation, and other Democratic lawmakers insisted the bill nicks both sides. Said Rep. Jim Marshall (D., Ga.), "The deals that the borrowers get are not particularly good. The deals that the lenders get are not particularly good.... In my view, it's a bailout for the entire economy and all of these people that have been dragged into it."

Austan Goolsbee, one of Sen. Obama's economic advisers, says the campaign weighed the downsides of rewarding bad behavior against the economic harm risked by inaction. "That's not a political calculation, that's very much the economically valid thing to do," he says. The issue, he added, is the threat that dropping home prices pose to the entire economy. Framed that way, Mr. Goolsbee said, voters are "much more amenable" to government intervention to "prevent something that's outside of people's control."

Nearly all pending proposals purport to aid the deserving -- usually defined as families who own their own homes and have a shot at paying a reduced mortgage -- and shun speculators and those who lied on their loan applications. Sen. McCain made "a very conscious decision not to throw money at Wall Street or people flipping second homes," said his economic adviser Douglas Holtz-Eakin. "You don't want to reward bad behavior."

McCain, Hillary, and Obama are all wrong and all are playing politics to varying degrees.

You Can Help

None of the following is a direct link. All go to a form of some kind. The easiest of the forms to enter is for Pelosi.

Email Nancy Pelosi
Email Obama
Email Hillary

Barney Frank makes things more difficult
He uses Congress' webemail which starts from your zipcode.
So to get a hold of him, you must pretend you are from his district.

Email Barney Frank
enter Massachusetts 02780-3496.
Put your address as 14 Summer St, Taunton, MA.

You can also try calling
Congressman Barney Frank
2252 Rayburn Building
Washington, DC 20515-2104
(202) 225-5931

Contact Bush

The following are direct numbers and a direct email link.

Please call and/or email the White House to voice your support of a presidential veto of any housing bailout bill:

Phone: 202-456-1414 or 202-456-1111

Just say, "I am calling to ask you to veto any housing bailout that comes out of Congress."

Click Here To Email President Bush: comments@whitehouse.gov

Get your emails in today. It can't hurt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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