Today, I was reading about the different plans that our three Presidential candidates are recommending to rescue consumers from the current mortgage disaster. Although, I feel for those millions who are experiencing a life altering foreclosure on their houses, I also believe that our capitalist system has to run its course in a more natural way. Stating it plainly, it is wrong for the government to bail out the masses who weren't victimized by illegal or unethical actions of predatory lenders.
Unfortunately, Hillary Clinton doesn't agree. She seems to have the strongest (and worst) plan to protect those down and out consumers nationwide. Her basic philosophy smacks of socialism as it follows the logic that it’s the Federal government's responsibility to protect the public at large, even if much of the public put themselves into this terrible position all by themselves. Thus, she has asked for a freeze on all foreclosures for the next 90 days and she also wants to provide states with a whopping $30 billion to stop most future ones from happening.
This concept runs so counter to the very essence of our 200+ year old market system. And, I believe the precedent being set will only hurt the fundamental psychology behind the institution of lending in the long run.
The plain truth is that not everyone should own a house. Many don't have the credit needed to obtain a loan, and most simply can't afford the month to month payments and other associated costs that are critical factors in becoming a homeowner. The statistics show that a large percentage of current defaults are the simple result of these speculative home owners borrowing way above their means because they believed that a continued rising market would cover their mortgages. But, it's no secret that the real estate market has always been cyclical. And, what goes up... must eventually come down. These adults are just that, they should have known better.
All three candidates have proposed some type of new laws that will create much greater transparency in the lending process. This will no doubt help with educating consumers. And, those lenders who acted unethically by taking advantage of customers through misleading or deceitful actions need to be punished (and those victimized consumers should receive financial help as well).
But, the bottom line is that the government shouldn't reward (or bail out) Americans who were irresponsible at the expense of those who weren't. And, this rush to lump so many Americans into the “victims bucket” is doing just that.