Only in America is failure rewarded with hard-earned taxpayer funds.
Buried in the tremendous mortgage bailout bill, which allows the FHA $300 billion to refinance mortgages in foreclosure, opens the gates for Fannie Mae and Freddie Mac to be bailed out by the Treasury if necessary, and raises the national debt limit from $9.8 trillion to $10.6 trillion, was provisions that “an affordable housing fund which would funnel as much as $600 million every year to activist organizations under the guise of promoting affordable housing,” according to an op-ed by Representative Ed Royce (R-CA).
Writes Congressman Royce, “This plan takes a percentage of the GSEs’ total new business and redistributes it to groups like ACORN and La Raza with lengthy histories of both voter fraud and anti-free market advocacy at the local, state, and national levels.”
According to the Consumer Rights League (CRL), the ACORN Housing Corporation (AHC) advocated “for loose credit [that] played a role in the current subprime mess…” all in the name of “affordable housing.” In other words, one of the major factors of the sub-prime meltdown was the issuance of loans to borrowers that could not afford them. According to the CRL’s report on ACORN, between 2004 and 2006, the AHC “used taxpayer money to advocate ‘exotic’ loans to low- and moderate-income customers” including interest-only loans, non-amortized mortgages, and reverse mortgages.
In short, one of the organizations primarily responsible for promoting the continuance of the “Community Reinvestment Act”—the legislation that lowered lending standards and in part laid the seeds for the current failures in the mortgage market—will be one of the primary beneficiaries of the mortgage bailout. So too are the banks—could already write bad debt off on their taxes—who that made the bad loans being bailed out, too.
Of course, this follows Congress’ pattern of rewarding failure and punishing success. The same legislative body that promotes “windfall” profits taxes and raising the capital gains tax is front and center, ready to rescue those who sowed the nation’s current economic woes.
Only in America.
ALG Perspective: 2008 may go down as the year that free markets died. As Larry Kudlow has noted recently, it appears that failure is no longer an option in the markets as far as Big Government is concerned. Instead, Congress appears bent on rewarding failure.
