Tales of the Golem; or, the Modern Epimetheus

Everybody knows the deal is rotten

The Honorable Henry Waxman
8436 West Third Street, Suite 600
Los Angeles, CA 90048.
(310) 652-3095.

Dear Mr. Waxman,

I am writing as one of your constituents to register my total opposition to Barney Frank’s mortgage bailout plan, and any other plan to use tax dollars to rescue housing lenders and borrowers from financial difficulty of their own making.

Unsustainable mortgages of the type addressed by the Frank plan could never have occurred without willful negligence and a degree of deception on both sides of the table. Such reckless borrowers and lenders deserve each other perfectly. What they do not deserve is one thin dime of taxpayer money once they find they have double-crossed each other.

Although the Frank plan is represented as aiding borrowers, in reality it would enable lenders to offload bad mortgages for 85% of the home’s supposed value. Of course, lenders will only accept this deal because in their estimation the mortgages are worth even less than that. So when the Financial Services committee supposes that only 1-2% of the new FHA mortgages will default, they are displaying much the same willful financial obtuseness as the original lenders did.

I have heard Barney Frank acknowledge that his plan will rescue the imprudent and undeserving, but he justifies this on the grounds that “the economy” will suffer without a bailout. As you know, Los Angeles has a high percentage of renters, and also many homeowners who did not gamble recklessly and dishonestly in the housing market. We too are part of “the economy.” For us to see our taxes go up or our government’s deficit increased, while the federal government blithely underwrites the worst loans made by the most imprudent lenders to the least responsible borrowers, would be the most perverse policy I can imagine.

Please safeguard the public purse from Barney Frank’s costly, immoral bailout plan.

Regards,

posted by Richard Mason @ Sunday, April 27, 2008