Mortgage Bailout: Time to Vent
New transparency looks a lot like old lack of transparency.
- First, Mr. President, don't insult my intelligence by telling me that paying for my neighbor's mortgage will benefit me by propping up the value of my home: My tax money will be wasted in propping up my neighbor's home value, so I'm paying for the propping up of my own. This isn't exactly pennies from heaven.
- Second, Mr. President, as to the "cram-down" provision you're proposing: Under current law, the portion of a mortgage carved out as an unsecured claim gets repaid in part under the plan of reorganization. Under your proposal, the unsecured portion of the mortgage gets wiped out.
Furthermore, under current law, mortgages are crammed down to the market value of the collateral; once you daisy-chain your plans, mortgages will be crammed down to 80% of the value of the collateral, thus rewarding stupidity with fresh equity forced out of taxpayers' pockets.
So much for the new era of transparency in the White House.
- Third, Mr. President, if you're going to force TARP money onto banks in service of a "too big to fail" thesis, and then you tell those banks how much they can pay their officers, and how they must administer their mortgage assets, and whom they should lend to, and how much they should lend - you have effectively nationalized these banks. In this new era of transparency, I'm waiting with bated breath for the politically unsavory announcement that you have in fact nationalized our banking system.
If this is indeed the new age of transparency, Mr. President, start by telling it the way it is: You're going to fund the greed and foolishness of banks and borrowers alike with the money of prudent citizens. Perhaps you're going to do this because that's where your moral and political compass is taking you; but you are also doing it because you're the government and you can.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter