New Miami Herald columnist refers to President Obama as "Predator-in-Chief"

[Mika]

Common sense missing in Obama bailout
BY GLENN GARVIN

There's a reason that English is the most widely spoken language on the planet: It's the most highly adaptable, capable of evolving to meet new needs in the blink of an eye. For example: Just last year, offering mortgages at a cheaper-than-market teaser interest rate with little or no money down was known as ''predatory lending.'' But conditions changed -- specifically, the party occupying the White House -- and now we call that style of lending ``national policy.''

The new definition was provided by Predator-in-Chief Barack Obama last week while making his daily announcement of a new bailout plan, this one for homeowners who took on mortgages they can't afford during banking's go-go days earlier this decade. Offering them cheaper new terms on their loans -- at taxpayer expense, of course -- will help us bolster ''those core values of common sense and responsibility, those are the values that have defined this nation,'' Obama said.

Only churlish Language Nazis would quibble with those bold new definitions of common sense and responsibility, much less note the extraordinary resemblance between Obama's mortgage-lending practices and those of the reptilian bankers he denounced so often during his presidential campaign:

• Down payments? We don't need no stinking down payments! Just like the bankers, who lured customers with deals that required no money upfront (at the height of the mortgage boom in 2005, 43 percent of first-time buyers didn't put down a single penny), Obama's plan doesn't call for the traditional 20 percent down. Instead, homeowners will be allowed to borrow more than their houses are actually worth. Just a week ago, being upside down -- owing more on your loan than the market value of your house -- was considered economically debilitating; now it makes you a prime customer.

• Hey kid, wanna smoke some mortgage crack? The first rock is free! Through a combination of government subsidies and arm-twisting of banks, the Obama plan will slash interest rates -- in some cases, probably to less than 3 percent -- until a borrower's payments are no more than 31 percent of his gross income . . . for the first five years. Then the interest rate jumps to market levels. A week ago, that was known as an ''exploding adjustable-rate mortgage,'' because so many of the people who took them got financially blown up.

To be perfectly fair, there's a big difference between Obama's ARMs and the ones the banks offered -- instead of the banks being on the hook when the hapless borrower goes delinquent on his payments, you will. Obama's plan calls for the government to spend $200 billon buying up these loans through its mortgage zombies, Fannie Mae and Freddie Mac. You may recall that Fannie and Freddie went broke in September because they held so many worthless mortgages and had to be propped up with $200 billion in taxpayer money. But what's another bailout among friends?

I hope Obama keeps his checkbook handy, because it's almost certain he'll be needing it again soon. We already know that trying to raise delinquent borrowers from the dead doesn't work, because banks have been trying like crazy to do it, with practically no success.

Contrary to what you see in old Frank Capra movies like It's a Wonderful Life, banks don't like to foreclose on homeowners. It's messy, expensive and time-consuming, and they almost always lose money when they re-sell the house. In 2007, when the mortgage crisis began, banks immediately began trying to keep their customers from defaulting, offering better interest rates, lower payments over a longer period, and sometimes even reducing the principals of loans.

Result: The government's own statistics show that, of the borrowers whose loans were adjusted in the first six months of 2008, half were delinquent again within six months. By eight months, the figure was up to 58 percent.

Obama, in announcing his mortgage program last week, argued that the defaults were brought on by rising unemployment. To some extent, that's certainly true, though it's hard to see how his new E-Z Payment Plan is going to help that problem -- surely the president isn't planning to give loans to people who are jobless?

No act of kindness

But the harsh truth is that most foreclosures are directed against people who should never have gotten loans in the first place. A study unveiled earlier this month by Federal Reserve economist Sean Chu and two University of Minnesota colleagues, Patrick Bajari and Minjung Park, shows that fully half the increase in defaults since 2006 is among borrowers with lousy credit scores who wouldn't have been eligible for mortgages before the credit binge began.

When people have too little salary and too much debt to pay for their homes, lending them more money is no act of kindness, either to them or the taxpayers who will foot the bill. It's more like waking up with a hangover and trying to cure it with a shot of Jack Daniel's -- you're just postponing the pain. And that's true no matter how many new pages you add to your dictionary.

Glenn Garvin wants to hear from you!

[e-mail]

[nc4bo]

1. But but but

I could have sworn that I just read that Bernanke himself said that the "unqualified" only made up 6% of the mortgage meltdown problem?

:S

[SemiCharmedQuark]

2. I, for one, definitely like to take financial advice from libertarian tv critics.

http://www.theadvocates.org/celebrities/glenn-garvin.html

[nc4bo]

3. Yea, I see what you mean. nt

[Median Democrat]

4. Same Talking Points As National Review in 12/07

A year has past, the economic crisis has deepened, yet conservatives still continue to repeat the same arguments against responding to the mortgage crisis. Heck, they even opposed Bush's tentative, piecemeal efforts. Its a wonder that the news media allows them to repeat these same talking points without pointing out that they were wrong then, and they are wrong now.

In other words, the situation has dramatically changed, and the rationales for not acting in December 2007 are now being used to attach Obama's efforts to stem the recession.

http://article.nationalreview.com/?q=NGU3MDNlYTgyYTUwOT...

/snip

Under the proposal the administration unveiled last week, the big mortgage lenders (e.g., Countrywide Financial) would allow borrowers who can’t afford higher payments to keep paying the “teaser” rate a little longer. Responsible borrowers who used the savings from their low-rate period to invest in education, or who went back to work after raising a child, get nothing out of the proposal. It primarily benefits those who imprudently took out mortgages they knew they could not afford unless housing prices continued to rise. How can the market discourage such behavior when the federal government encourages it?

If this moral hazard were the only consequence of the proposed bailout, it would be reason enough for opposition. But the bailout would also hurt renters who hoped that the current dip in housing prices would give them an opportunity to buy. They responsibly waited and saved for such an opportunity, even as others rushed headlong into mortgages they now find themselves unable to pay back. If the president’s bailout succeeds in bolstering home prices, it will punish prudence and reward recklessness.

* * *

Defenders of the administration’s plan argue that it would be worse for investors if the mortgage banks were forced to foreclose on thousands of borrowers. But that is beside the point. If it is in investors’ interest to allow mortgage banks more flexibility to renegotiate the terms of certain mortgages, there is nothing stopping them from working out a solution on their own.

What we don’t need is for the federal government to pressure everyone into a one-size-fits-all approach — especially one that rewards irresponsible lending and borrowing, makes idiots of prudent borrowers, and punishes renters for whom a dip in home prices is a big opportunity. Americans who believe in personal responsibility and oppose big-government bailouts need someone to speak for them. Why not a Republican running for president?

/snip

[Cha]

5. Fucking disrespectful

asshole.