Our View - Sunday
Grab a bucket
The subprime bailout is coming
You just knew this was coming, given the Pavlovian way politicians react to headlines. The push is officially on for a legislative response to the subprime mortgage mess, led — much to our chagrin — by a couple of congressman from Colorado.
In the first of what undoubtedly will be a wave of bills aimed at pandering to an emerging political constituency — the legions of Americans who are in over their heads — Reps. Ed Perlmutter and Mark Udall last week won quick approval of a bill that will permit the Federal Housing Administration to guarantee the loans of borrowers who took the subprime plunge, only to get in trouble when the low introductory rates went up. That’s tens of thousands, maybe hundreds of thousands, of people. And the potential exposure this will mean for taxpayers, who are themselves the guarantors of FHA’s “guarantees,” is huge.
As unfortunate as the present wave of foreclosures is, we think it would be wrong — and could drag taxpayers into an S&L-like quagmire — for government to intervene on behalf of subprime borrowers. These folks took a risk, by assuming larger mortgages than they could handle, based on the assumption that 1) the value of their home would continue to steeply appreciate, and 2) they would figure out how to pay the higher mortgages later. Most did so with eyes wide open. They succumbed to temptation and made a big mistake.
To turn these people into a new victim class ignores the role personal responsibility must play in a free society. It treats people like stupid children. And it exposes taxpayers (many of whom showed more restraint) to potentially huge liabilities.
“I know that people have been attracted to subprime mortgages but they have a lot of fine print,” said Udall, a Democrat running for Wayne Allard’s Senate seat. He says he was inspired to author the bill after an airline employee asked him for help. Instead of simply referring the person to a financial adviser, Udall decided to also help every subprime borrower in the land. What generosity — with other people’s money.
Other congressional bailout plans are even more stupid. One bill would allow homeowners to “tack on the delinquent payments onto the end of a loan, keeping the monthly payment the same but extending the term of the loan by a year or two,” according to one report. A year or two or three or four, perhaps, if enough delinquent payments pile up.
New York Senator Charles Schumer wants to give $300 million to as yet un-named “nonprofits,” which will “advise families on how to refinance or renegotiate their mortgages.” But a lack of money in the borrower’s bank account, not a lack of advice, is the problem. If Schumer is willing to spent $300 million on doling out advice, just imagine how much he’s willing to spend on the bailout.
The slippery slope potential is huge.
Is the government only going to intervene on behalf of atrisk borrowers, leaving those who have already been foreclosed-upon out in the cold? If such assistance is predicated on the idea that these people are all the hapless victims of unscrupulous lenders, aren’t the already-foreclosed-upon entitled to something, as well? Will government aid be means tested, or also go to the couple earning $200,000 who bought a mansion during the boom times? Couldn’t the creation of this new government safety net actually encourage delinquencies and defaults, once people know Uncle Sam will help them out of the jam? And what unfortunate new precedent might we be setting? Will the government next come to the aid of those who get in over their heads with credit cards?
The wave of foreclosures is set to crest in the next 12 to 18 months — coinciding with the most heated stretch of the campaign season. Thus, politicians from both parties will be trying to outbid each other in a pander for the “foreclosure vote.” It has all the makings of the proverbial perfect storm, from the taxpayers’ point of view. Unless we all raise a voice of protest, we’ll be manning the bucket brigade in the next great bailout.
We can’t leaf this to chance
Get out and glory in the aspens this fall. They may not be around much longer. Much attention has been paid to the slow-motion catastrophe claiming Colorado’s pine forests, but our signature aspen stands are also dying en masse. A phenomenon called Sudden Aspen Decline has killed almost 10 percent of groves in the San Juan National Forest, reports The Grand Junction Sentinel. And stands in the Grand Mesa, Uncompahgre and Gunnison national forests “are also dying at an alarming rate.” Statewide, 138,000 acres of aspen are dead or dying, and experts say the worst is yet to come. Utah is losing nearly 50 percent of its aspens.
As in the case of the state’s blighted pine forests, there seems to be two schools of thought regarding a response. The dominant school, unfortunately, counsels passivity. SAD (a fitting acronym), like pine beetles and other contagions, is part of the natural process, the noninterventionists say. We have no choice but to let nature take its course.
But we advocate for a more aggressive response, because we believe man can use his knowledge and technology to actively manage public lands for beneficial outcomes — and because the die-offs, if left un-checked, are the single greatest threat there is to Colorado’s aesthetic appeal and economy.
Tackling these problems won’t be easy or cheap, but we must try. The biggest barriers to action are bureaucratic red tape and a lack of leadership from politicians, many of whom fear the green extremists in the noninterventionist camp.
Not everything about SAD is understood, but The Sentinel reports that some countermeasures seem to have promise. We’re sure other responses might be found if adequate attention and resources are applied to the task.
So, go out and see the leaves change. Then contact the governor and your legislators and demand that they get off their aspens and do something to save our forests.
