Bush Admits Free Market Failures Even As He Touts Free Market Housing Solutions
Bush Admits Free Market Failures Even As He Touts Free Market Housing Solutions
Just yesterday, a new report revealed that home foreclosure rates in February had skyrocketed 60 percent from the same month last year. The amount of equity Americans own in their homes plunged to lows not reached since 1945; and home sales remain at near record low levels.
Yet throughout this crisis, Bush has refused to lend homeowners a helping hand. In fact, he has repeatedly insisted that homeowners are at fault for intentionally buying homes they could not afford:
“It’s not the government’s job to bail out speculators or those who made the decision to buy a home they knew they could never afford.” [8/31/07]
“Some borrowers took out loans they knew they could not afford. … We should not bail out lenders, real estate speculators or those who made the reckless decision to buy a home they knew they could never afford.” [12/6/07]
However, in a Friday speech to the Economic Club of New York about the state of the economy, Bush admitted that some of the borrowers now facing foreclosure may have been confused about the terms of their loans:
These mortgage agreements can be pretty frightening to people; I mean, there’s a lot of tiny print. And I don’t know how many people understood they were buying resets, or not. … And to the extent that these contracts are too complex, and people made decisions that they just weren’t sure they were making, we need to do something about it.
Watch it:
14 Responses to “Bush Admits Free Market Failures Even As He Touts Free Market Housing Solutions”
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Usury is against the law.
March 17th, 2008 at 11:07 amHow are ARM loans different? To allow this type of speculation to be offered to the public is exactly why lenders need regulation.
TP you need to change the date on that link from 12/6/08 to 12/6/07.
March 17th, 2008 at 11:22 amWhy is it anyone else’s job but the buyer to know what bills they can afford? If people don’t know what an ARM is, they shouldn’t be buying houses… and if they don’t understand what a monthly payment is, they shouldn’t be buying houses either.
March 17th, 2008 at 11:23 amThere are two levels of responsibility in this nation according to Bush:
1. The common rabble: These are people who by nature are lazy, shiftless and dishonest. Their faces must be pressed into the dirt for any failing by the heavy heel of business, government and the wealthy.
2. The ruling class: Those who have proven their worth by accumulating sufficient wealth must be relieved from the responsibility for their mistakes since they create jobs, investments and businesses that provide the money necessary for political campaigns.
March 17th, 2008 at 11:46 amCorporations, once again, have been been proven to have more rights than people.
March 17th, 2008 at 12:32 pmrbewley Says:
March 17th, 2008 at 11:23 am
Why is it anyone else’s job but the buyer to know what bills they can afford? If people don’t know what an ARM is, they shouldn’t be buying houses… and if they don’t understand what a monthly payment is, they shouldn’t be buying houses either.
Hey, have you ever thought that maybe a very large portion of the people that took out ARMs expecting to be able to refinance them before a rate reset, but now can not refinance because of the market???
You might try thinking a bit before posting.
March 17th, 2008 at 1:31 pmJMOHR, I think you’re point has a lot of merit. It would be really interesting to put together a sort of side-by-side comparison of when the Bush administration has been interventionist and when it has not… then see if those activities match up against the constituency groups you identify. For example, how does the steel tarriffs from the first term fit in?
To the original post, I’m curious how we might envision a position for Bush to take that is more than just rhetorical. My big concern here is what kind of policy can be persued that shelters home-ownership, while preventing lenders from extending credit in situations they really shouldn’t be? Put another way, how do we avoid the moral hazard associated with government intervention?
March 17th, 2008 at 2:23 pmNiles, not sure about long term policy, but a short term solution is very, very simple – an immediate rate freeze on ALL ARMs. This would at least stop the bleeding – something nothing else can do.
March 17th, 2008 at 3:02 pm“Hey, have you ever thought that maybe a very large portion of the people that took out ARMs expecting to be able to refinance them before a rate reset, but now can not refinance because of the market???
You might try thinking a bit before posting.”
a.) Why would anyone take out an ARM to begin with, knowing that it could reset to something they couldn’t afford?
b.) Surely they saw interest rates rising, and chose to do nothing about it. I just refinanced for 30 year fixed for 5.5%. These people can’t do the same thing? If they aren’t in a position to, they clearly have not thought through their financial situation, and I don’t see why my tax dollars should go to bail them out.
Can I buy a Corvette, and when I can’t afford it, can the government make my payments for me?
March 17th, 2008 at 5:59 pmFor the last decade it has been explicit federal policy to get as many people into homes as possible. Fannie Mae and Freddie Mac account for 40% of the mortgage market. They are government-sponsored agencies.
Yet this crisis is a failure of free markets? Hardly.
Don’t let Bush’s ignorant rhetoric fool you. He and his cronies have no interest in truly free markets. That would mean too much risk of losing their privileged place as Our ulers.
March 17th, 2008 at 7:28 pm“It’s not the government’s job to bail out speculators or those who made the decision to buy a home they knew they could never afford.” [8/31/07]
It’s not the taxpayers job to bail out the banks that gambled in the first place. Let them get their just rewards just like everybody else.
March 17th, 2008 at 8:07 pmsuch is the plight of a partially deregulated system
March 17th, 2008 at 10:38 pmEd4 Says:
March 17th, 2008 at 7:28 pm
Don’t let Bush’s ignorant rhetoric fool you. He and his cronies have no interest in truly free markets. That would mean too much risk of losing their privileged place as Our ulers.
Exactly. The Free Market is a fairy tale parents tell their children at night when they want them to grow up and become economists. It doesn’t exist in the real world. People and corporations are not utility-maximizing machines with equal access and opportunity. They’re corruptible rent-seekers who will exploit any loophole for momentary gain even at the expense of future stability.
March 18th, 2008 at 7:53 amOne thing for sure, those tax cuts are doing wonders for our economy….
March 18th, 2008 at 11:59 pm