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  • Let's Get Congress Out of the Housing Market

    Defending $150 billion worth of unrelated tax benefits that Congress stuffed into the already $700 billion Wall Street bailout bill, Rep. Barney Frank (D-MA) told the International Herald Tribune: “If you don’t want politics in this process, you probably shouldn’t be handing it over to 535 politicians. That’s democracy.” We couldn’t have come up with a more succinct explanation for ending government intervention in the market if we tried.

    University of Chicago professor of law Richard Epstein elaborates for Forbes:

    Disasters like this latest financial meltdown don’t just happen. Mistakes this huge require an impoverished political philosophy to grease the skids. Fannie and Freddie didn’t design their horrific lending policies by chance. No, behind this lending fiasco lay the strong collective preference for the “patterned principles” of justice that Robert Nozick attacked so powerfully in his 1974 masterpiece, Anarchy, State, and Utopia.

    In his perceptive Wall Street Journal op-ed, How Government Stoked the Mania, Russell Roberts noted that the current congressional fixation called for a relentless increase in homeownership relative to renting, with certain minimum fractions allocated to low-income families. Pray tell, what patterned principle dictates that we should have 12% of all mortgages made to low-income borrowers in 1996, 20% in 2000, 22% in 2005 and 28% by 2008?

    The grand objectives articulated by Congress–and to be fair, by Republicans who preach the virtues of the “ownership society”–are not freebies that can be satisfied at no real cost. Quite the contrary. Once Congress set in place a destructive lending policy, we could count on private parties to issue bad loans from which they profited, knowing that dear old Fannie and Freddie would happily pay face value for paper that everyone knew was worth a whole lot less.

    But Congress lived in a dream world. It forgot that the quality of the paper would deteriorate as its ambitious social objectives let its underwriting go south. So, too late in the game, we learn from yet another case where Congress should have done good by doing nothing at all. Let people rent or buy in unsubsidized markets and then watch with supreme indifference what residential patterns emerge. That distribution would have been a lot less toxic than the brew generated by our fevered political leaders. So says our frustrated libertarian.

    Posted in Economics [slideshow_deploy]

    2 Responses to Let's Get Congress Out of the Housing Market

    1. Pingback: How to Handle the Mortgage Mess? Do the Right Thing. | The Sundries Shack

    2. Barb- st. paul says:

      I have in front of me an advertisement from a local paper dated October 1, 2005 from a company called "Twin City Home Loan Corp." stating: 0% DOWN PAYMENT INTEREST RATES STARTING AT 1.55% Mortgage as low as $695.00 for a $200,000 loan. No income, No asset, No employment, No verification. Good credit, Bad credit or bankruptcy declared."

      I happened to pick up this paper at the time called "Hmong Times" due to a horrendous crime committed by a person from the Hmong culture, as I was curious to read their reaction, which is chilling. But anyway, the president, vice president and executive accountant are people from the Hmong culture.

      Immigrants know more about the government then we, the ones that pay the government know. The houses are newly built and owned by immigrants. We pay property taxes here but there is no way this type of advertisement would be able to pay the outrageous taxes put on us. We have a 1970 two bedroom home, on an average sized lot and pay over two thousand dollars in property taxes and receive little to nothing for it.

      In St. Paul, immigrants are working for a business or the government. There are government buildings with foreign names. There are public schools with foreign names. There are government programs that pay the expenses not only for housing but for other expenses such as food, utilities, cars and to their personal cultural lifestyles, etc. I'm all for helping the needy but am insulted to be taken advantage of.

      The government fails to expect immigrants to live up to the American principles as the government doesn't stand for them either. The government fails to acknowledge this oversight as they continue to push for increased taxes and more programs in the name of immigrants who are the ones that benefit.

      Freedom comes with responsibilities but immigrants use the government more and more. My district senator is an immigrant from the Hmong culture who does NOTHING for everybody. But much for the people of her culture. Much of what they have the ability to do for themselves.

      There are people in the government that are servicing with extreme bias at the taxpayers expense. I am offended that people of immigrant status take home as much if not more then our household income, yet receive all of this less the accountability to their rightful expenses. American culture benefits all at no expense, peoples personal cultural lifestyles should be at their expense. There is NO EQUALITY in this state and various levels of expectations and responsibilities. Can someone investigate? I am so disappointed.

      We've been sold out!

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