Tuesday, September 04, 2007

Government's role in the "subprime" crisis

Should our government be involved at all with the various homeowners and lenders who are getting hurt as more defaults and foreclosures come on the scene?

My initial reaction was absolutely not. Why should we be encouraging poor fiscal behavior? But I think I heard the best explanation yet this morning from old Barney Franks (D-Mass) on Washington Journal on C-Span this morning. He suggested that the reason to be bailing-out people is that essentially the brunt of this problem is in isolated areas...i.e. lower income areas. And I've seen articles about this where whole neighborhoods are wiped out. But his point was that we should be helping the "subprime" folks who are in trouble to help out the homeowners in these neighborhoods who ARE paying their mortgages. If we don't help the "subprime" crowd then the values of homes in these neighborhoods will just get hammered.

I thought it was a persuasize argument...


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