Angry renters say 'hell no!' to government bailout
By Jessica Swesey, Wednesday, April 16, 2008.Bookmarking Sites
"I'm doing the responsible thing, saving my money until I can afford a home. Sigh."
Those words come from someone named "Stephanie T." in Berkeley, Calif., and are displayed at a Web site, AngryRenter.com, which as you might've guessed is a site formed by angry renters who are protesting any government bailouts for house flippers and banks.
The site includes a petition with over 2,000 signatures to be delivered to Congress on April 21. The petition proclaims:
WHEREAS: Most Americans rent or own their home outright, and the vast majority of homes (98%) are not in foreclosure.
WHEREAS: Both banks and borrowers should be reponsible [sic] for their actions, and the government should not reward reckless behavior.
WHEREAS: It is wrong to force all taxpayers-- including renters who are already subsidizing home owners through the tax code-- to pay for additional bailouts for big banks and home flippers.
BE IT RESOVED: That Congress should not pass any bailout programs that reward risky borrowing and lending. Let the free market sort it out!
Or, as Alan P. in Hialeah, Fla., notes in his signature:
"I am working very hard to come up with the money to actually save for a house I can afford. Why should I subsidize those who went for instant gratification and didn't do what I am prudently doing? If every gambler and speculator is to be bailed out, why should anyone do the right thing?"
The notion of a government bailout in the wake of the housing boom excesses that had people buying homes with no money down, flipping houses for cold cash, and some lenders making off with huge bonuses is a hard one for renters to swallow.
No doubt, on the surface it does appear as if irresponsible investing will be subsidized by taxpayers. But what angry renters may not realize is that they will pay for these mistakes whether there is a government bailout or not -- in the form of depreciating home values, loss of city revenues, and a dragging economy.
If you can't beat 'em, join 'em?
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Submitted by Matt Carter on April 16, 2008 - 12:32pm.
I think the polls show the vast majority of people are opposed to a "bailout," but the question is, what constitutes a bailout?
Jeremy Seigel had an interesting piece a while back on the Fed's role in the sale of Bear Stearns to JP Morgan Chase. By providing $29 billion in loans, the Fed "probably did prevent Bear from going into insolvency, but it hardly 'bailed out' investors," he said.
Most of Bear Stearns value was wiped out by the sale, Seigel said, and because of the way the deal was structured, the Fed could actually end up making money. The alternative -- a potential collapse of financial markets -- would have affected us all.
Or consider the proposal put forward by Barney Frank to authorize FHA to guarantee $300 billion in refis. Lenders would only be able to recover 85 percent of a distressed property's CURRENT value, and the program would include restrictions to limit the profits of homeowners who tried to flip their homes if housing markets recovered. Frank claims the program would pay for itself because it would be paid for by premiums collected from borrowers.
I'm not saying either one of these actions was or would be the best approach, but it's not clear to me what specific "bailout" proposal angryrenters.com is fighting.
I think even Barney Frank would agree with their proposition that "Congress should not pass any bailout programs that reward risky borrowing and lending."
Angryrenters.com is pitching itself as a grassroots thing, but it's actually backed by FreedomWorks, a conservative think tank headed by former House Majority Leader Armey. Their big causes include a flat tax (Steve Forbes is a board member) and illegal immigration. The group also believes "efforts to regulate carbon dioxide are an attempt by the global Left to gain control of the U.S. economy."
Not a terribly intelligent starting point for a debate.
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Submitted by Ki Gray on April 23, 2008 - 4:14pm.
I think any bailouts should obviously be in the forms of loans. But I think the government sitting on their hands could cause more problems for everyone including renters. If the economy collapses people could lose their jobs whether they rent or now.
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