Housing Bailouts and Taxpayers Obligations

An article in Fortune presented a relevant and very concerning proposal that Congress is currently reviewing. Based on our discussions in class this week and also in coordination with Professor Silver’s literature, I thought the topic of housing bailouts and taxpayers obligations would be appropriate for a Blog. In this article dated April 23rd, a growing concern of many American’s is whether Congress will pass legislation requiring taxpayers to bailout suffering mortgage borrowers. This angers me for numerous reasons, most importantly, the fact that I have the credit and funds to effectively pay my mortgage knowing full well from the beginning that buying a house is a big commitment and that I would be solely responsible for paying back my debt. Why should homeowners, such as myself, be penalized and made to support those borrowers who should not have been able to purchase in the first place?

Sure, I realize that banks are also tangled in the root of the overall problem and should have more strict standards on who to lend money too, but I do not think they should be entirely held accountable for individual decisions.

I think this type of intervention will only encourage people, who may have less than average credit and funds capable to handle a mortgage, to take unwarranted risks in the belief that the government will bail them out or rescue them if they end up getting in way over their heads.

Additionally, the article mentions the importance of a free market and letting the economy run its course without interference of the government. Although the economy is struggling, I think minimal obstruction of the government is key – constant government meddling only sets a precedence that rewards bad behavior. I would agree that the market needs to sort these issues out gradually and that the less government interaction, the better.