I find it offensive that U.S. taxpayers are being asked to bail out investment banks, commercial banks, the real estate industry and irresponsible borrowers to the tune of $300 billon via HR 3221 [Foreclosure Prevention Act of 2008]. To suggest that any public, taxpayer money should be used to socialize private investment losses is unconscionable.
Our country simply cannot afford this, and such action goes against any reasonable belief in free markets and free enterprise. The 80 percent of responsible Americans should not bear the costs of the 20 percent who were either speculators or were irresponsible. Furthermore, this bill, if enacted, provides a template for an even larger bailout of Fannie Mae and Freddie Mac in the event of their likely insolvency.
HR 3221, if passed, will cause considerable risk to our economy, and will exacerbate – not mitigate – the problems within our financial system. It appears that this bill, along with the ill-conceived tax rebates already enacted, will drive our nation’s budget deficit for this year alone to almost a half-trillion dollars. This is totally irresponsible spending which will be borne by our children and grandchildren. It will also drive up government borrowing costs as global faith in the dollar and the U.S. financial system becomes further stressed.
The solution to the financial crisis is really simple, but painful. The banks and financial institutions must immediately mark to market all their assets and liabilities, so that inter-bank trust can return, and those who are insolvent should be exposed and bankrupted if necessary. During the first calendar quarter 2008 earnings reports, many financial institutions have moved tens of billions of impaired assets to Level 3, which masks their true financial standing and further delays the required de-leveraging in our financial system.
Opposing HR 3221 does not mean that thousands of people will become homeless. Those who cannot afford their homes must give them back to the banks and investors who made the irresponsible loans. These homeowners can become renters in their same neighborhood for far lower monthly expenses than their home loan.
These people are not homeowners, they are home debtors. Home prices must come down to three times the average income in any given Metropolitan Statistical Area so that people can purchase them without these exotic loans. HR 3221 gets in the way of that natural process.
Congress should focus on fiduciary accountability and stronger regulation of our financial institutions. Favoring this bill would be especially egregious for Southwest Virginia residents, who for the most part did not participate in this speculative bubble and therefore should not be held responsible for any bailout.
Chip Kuennen
Bristol, Va.
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