In a discussion with Rick Santelli on Fast Money, CNBC's Dylan Ratigan argued that one of the major factors stifling a restoration of market confidence has been the failure to crack down on the bad actors -- the charlatans, crooks, and incompetents who drove corporate America into this ditch.
Ratigan makes a pretty bold comparison: He argues that the people who are saying that we need to "move forward" with a recovery are like people who said that we should "move on" after September 11, and not bother with going after Osama Bin Laden.
Ratigan had a great suggestion for a housing tax credit: Provide every active member of the United States military with a $50,000 transferable homebuyer tax credit. If they don't want to buy a home, they can sell the credit to someone who does and keep the cash. The idea behind this plan is that the effort to prop up the housing market would benefit people in the armed forces -- not people who lied on mortgage applications and bought homes they couldn't afford.
It's a hard idea to argue with. Watch the video below for more.
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Reader Comments (Page 1 of 1)
3-02-2009 @ 4:58PM
beanspants said...
though i have no particular complaints with this proposition, it does lead to several questions:
1) 'active member' of the military has a fairly specific meaning. Assuming the most strict, this would mean that reservists on duty would get screwed, but that's pretty much par for the course in the life of a reservist.
2) the venn diagram of 'people who lied on their mortgages' and 'people in the military' most likely has a pretty good sized middle where the two circles join.
3) why bailout homes (specifically) at all? If you want to give members of the military a cash credit (and a defacto raise), just give them a cash credit. Homes are currently extremely overpriced by historical standards. This condition of overpriced-ness is hurting as many people as it is helping.
3-02-2009 @ 7:56PM
JCH said...
Nobody passed laws in Washington DC to allow for "easy credit". That was arranged between George Bush and the private mortgage companies.
So how on earth can Ratigan/Santelli have a better idea if they don't even understand what happened?
The money has been followed. It leads straight to the Bush White House and their publicly stated intention of building 5.5 million "NICE" houses for minority (poor) families. They did this to seed the suburbs with future black and latino voters. Said so in print. No law made them do something this stupid. The hunger for raw political power motivated them, and nothing else. Bush publicly said it would require creative mortgage financing, and streamlined mortgage applications:
1. no income checks
2. no credit checks
3. no down payments
4. ARMs when the prime was rock bottom - moronity to the 10th power
5. etc.
Once these fly-by-night mortgage companies figured out how much money they could make with the fast-and-loose rules, they extended the scam to white buyers who had horrific credit. Realtors and home builders were more than happy to go along with it. They made billions.
10 million houses built and sold with this financing scam in the 2000s, and almost every single one of them is going to hit foreclosure.
Add to them all the innocents who played by the rules. Like, the veterans who have long since returned from Iraq and qualified for VA loan - only to see these Santelli-types in the Bush White House destroy their home values and their jobs.
3-14-2009 @ 7:00PM
TEM said...
It's too bad that the above policy blamed on President Bush was in fact started by the Clinton administration. I can't paste the PDF in here, but here is a quote from an article in the NY Times from September 30, 1999:
"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people..."
It's a lose-lose situation, make the loans, you lose money, don't make the loans, it's viewed as racist, or "unfair."
Great quote from the end of the article:
"...there is another thrift industry growing up around us. If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."