Thanks to Chuck for the feed. President Bush recently unveiled his plan to help homeowners in this time of increased foreclosures and mortgage defaults. Bush wants to see the FHA play a role in helping people refinance their homes at lower rates to keep them from defaulting. Of course, the FHA is a government program, funded by taxpayer dollars. The people in question originally financed their homes with adjustable rate mortgages, that when matured converted to a much higher interest rate...such is the risk of the ARM. You get a lower rate, but it's a dice roll. Now, President Bush feels it's the government's job to bail out those who rolled the dice.
Bush’s proposals unveiled Friday are designed to help combat those defaults. They would make it easier for borrowers now holding adjustable rate mortgages that are resetting to higher monthly payments to refinance those loans using the resources of the Federal Housing Administration. The FHA is a Depression-era agency created to help low and moderate-income Americans afford homes....Bush’s proposals follow a number of measures already introduced in Congress to deal with the mortgage lending crisis. Many Democrats said while they welcomed Bush’s ideas, they felt they did not go far enough and should be modified to help more people....Sen. Charles Schumer, D-N.Y., said he believed Bush’s announcement Friday represented a major ideological shift for the administration, which has generally favored free-market solutions to problems rather than increased government involvement. “The president has gotten out of his ideological straitjacket and seen that in times of crisis, one of the jobs of government is to help,” Schumer told reporters at a Capitol Hill news conference.....FULL STORY
Chuck Schumer's definition of help is rather loose. Remember, the people in question basically made bad financial decisions. Everyone knows the risk of an ARM mortgage. But Schumer and, apparently, President Bush feels it is now the government's job to grant these people a reprieve, at taxpayer cost. No longer are we responsible for our own financial decisions. No longer do we have to take into account financial risk. Big brother government will bail us out.
And this is life in a "free market".