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Morning Bell: Steps to Halt Future Bailouts
Posted By Conn Carroll On April 16, 2008 @ 9:02 am In Ongoing Priorities | Comments Disabled
The Pew Charitable Trusts released a study yesterday surveying state action on the recent wave of increased foreclosures. Pew senior officer Tobi Walker told the Washington Post : “The states are experiencing this pain more directly than the federal government is.” This is partly true. A more accurate statement would be some states are feeling the pain more directly than the federal government is. As this map  of Mortgage Bankers Associaiton data shows, subprime foreclosure rates exceed 10% in only 13 states, including California, Nevada, Florida, Ohio and Michigan.
The Post goes on to report that “in some ways, states and cities are better positioned to tackle the fallout than the federal government.” This is undoubtedly true. The subprime foreclosures in Nevada, California and Florida are largely due to a speculative bubble that has just popped, while foreclosures in Ohio and Michigan are the result of more fundamental weaknesses in those state economies . The different causes behind these problems call for local solutions, not one-size-fits-all federal action.
For example, the New York Times reports  that efforts by Ohio to work with nonprofits and loan servicers to modify troubled loans have led to results “visible on the ground.” Coalition on Homelessness and Housing in Ohio executive director Bill Faith told the Times: “Up through the end of 2007, counselors and homeowners said, ‘We call these companies and we get the runaround, we can’t get through the maze.’ We weren’t seeing any significant modifications. That’s beginning to change. When I talk to the nonprofits, they say they’ve had as many loan modifications in the first quarter of 2008 as in all of 2007.”
Despite the success of voluntary programs at both the state and federal level , enough momentum still exists on Capitol Hill for new federal legislation. For principled conservatives, the best way to protect the American taxpayer now is to push for amendments that will limit the risk that this latest federal bailout will not encourage future risky behavior. Ways to improve the current housing package winding its way through Congress include:
Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2008/04/16/morning-bell-steps-to-hault-future-bailouts/
URLs in this post:
 Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2008/04/15/AR2008041503157.html
 map: http://www.heritage.org/Press/ALAChart/images/ALC_023_mortgage_mess_3col_c.jpg
 The subprime foreclosures in Nevada, California and Florida are largely due to a speculative bubble that has just popped, while foreclosures in Ohio and Michigan are the result of more fundamental weaknesses in those state economies: http://www.heritage.org/Press/Commentary/041408g.cfm
 reports: http://www.nytimes.com/2008/04/16/us/16foreclose.html?adxnnl=1&ref=todayspaper&adxnnlx=1208341163-NIOHwFiLYA/ZfYGveFa1HA
 federal level: http://www.foundry.org/2008/04/11/morning-bell-let-hope-work-now/
 brink of insolvency: http://www.foundry.org/2008/04/14/morning-bell-stop-the-bailout-parade-before-it-gets-worse/
 according to one recent study: http://www.nytimes.com/2008/01/13/business/13view.html?_r=3&scp=1&sq=Tyler+Cowen&oref=login&oref=slogin&oref=slogin
 tacking tens of billions of dollars in domestic spending to funding for the troops: http://www.usatoday.com/money/economy/2008-04-15-Econoplan_N.htm
 Mahmoud Ahmadinejad: http://www.usatoday.com/news/world/2008-04-16-iran_N.htm
 discovered today: http://www.nytimes.com/2008/04/16/business/16bailout.html?_r=1&ref=todayspaper&oref=slogin
 biofuel mandates are starving people in poorer countries today: http://www.nytimes.com/2008/04/16/world/europe/16food.html?ref=todayspaper
 Hugo Chavez: http://www.nytimes.com/2008/04/16/business/worldbusiness/16vennoil.html?ref=todayspaper
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