Tuesday, September 09, 2008

The Mortgage Crisis Bailout: a Necessary Evil?

I've posted plenty about my opposition to the mortgage crisis bailout. But could it be unavoidable, because letting Fannie and Freddie fail could cause damage to stock markets world-wide, and push us all into a full-blown global recession? And will US taxpayers benefit, more than they would if the bailout did not occur? John McCain addressed this recently.

McCain: Aides may work for $1 a year
Never mind the headline (you can read the rest for that), but it was this particular part that was interesting to me:
[...] Schieffer also asked McCain about the administration’s plan for a takeover of the mortgage giants Fannie Mae and Freddie Mac, to be announced Sunday afternoon.

“I think it has to be done, Bob,” McCain replied. “I think that we’ve got to keep people in their homes. There’s got to be restructuring, there’s got to be reorganization, and there’s got to be some confidence that we’ve stopped this downward spiral. It’s hard, it’s tough, but it’s also the classic example of why we need change in Washington. It’s an example of cronyism, special interest, lobbyists, a quasi-governmental organization where the executives were making hundreds of — some, [a] billion dollars a year while things were going downhill, going to hell in a handbasket.

“This is the kind of cronyism, corruption, that‘s made people so justifiably angry. I did have a long conversation with [Treasury] Secretary [Henry] Paulson — a man I admire and respect — and he did say that when the housing market starts back up, and it will, it will in America — then the taxpayers are going to be the first to be paid off. They’re the ones that are going to be reimbursed when the values of their homes start, hit bottom and start back up, and they start getting more money back in. And that has to be in it, a vital part of it. And again, this is a system that cries out for reform.”

Of course, Fannie and Freddie are government entities that should never have been created in the first place. But the Democrats insisted on giving loans to people who were not qualified. Now we HAVE TO clean up their mess, the problem they created, to keep things from getting worse. Government should not be in the mortgage business. Why? Follow this link:

Fred Thompson on Freddie Mac and Fannie Mae

Pat gives us the most relevant quotes in the above link. I agree with Pat: Let's hope Mac has plans for Fred in his cabinet - as well as Phil Gramm.

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