Wednesday, November 21, 2007




Today’s Wall Street Journal reports that Treasury Secretary Hank Paulson, a prominent member of the conservative, free market Bush administration, “is pressing the mortgage-service industry to help broad swaths of borrowers qualify for better loans instead of dealing with mortgage problems on a case by case basis.”

Mr. Paulson’s admonition is okay, I suppose, as far as it goes. But if it is good business to renegotiate terms of loans (We will leave discussion of the ability of mortgage servicers to renegotiate terms of loans that have been sliced and diced into pieces held by myriad unidentifiable ultimate lenders to another day.), why does the heavy hand of the federal government have to come into play? One wonders why, if the Bushmen really believe in the wisdom of the free markets, they suddenly feel the feds must tell the lenders how to conduct their business. If the best course of action is to adjust the terms of the loans, and write those loans down appropriately, surely the lenders will do so (if indeed the lenders can be found).

Mr. Paulson, the Journal reports,” faulted Congress for failing to pass several bills that could potentially provide relief for borrowers, and then took aim at a Republican senator who is holding up a piece of legislation that would allow the FHA to play a greater role in the cleanup.” It seems that Senator Tom Coburn, one of the few real conservatives remaining in the GOP, is concerned that such a scheme will result in the taxpayers’ being liable for risky loans that were, after all, freely negotiated by supposedly ready, willing, and able parties. He’s not all that enthusiastic, about putting the taxpayers on the hook for bad loans that they had nothing to do with in the first place. It appears that Senator Coburn has the crazy idea that frugal, financially conservative taxpayers who actually know something about managing money should not be forced to subsidize the often lavish lifestyles of people who insist on living over their heads and having other people pick up their bills when things don’t work out as well as they had supposed. What apostasy!

Mr. Paulson replied that he understood Senator Coburn’s concern. However, he said “This is not business as usual. This is an extraordinary situation.”

Maybe so. But one gets the nagging impression that, by “extraordinary,” Mr. Paulson does not mean “has the potential to devastate the economy and cause recession, or worse,” though that is true. No. One gets the impression that, given the GOP’s worldview, especially with the Bushites in charge, that what Mr. Paulson means by “extraordinary,” is that this is one of those really not all that extraordinary situations in which the wealthy are looking for a handout and that, therefore, the government must hop to it, right away, sir.

The modern GOP has no room for people like Mr. Coburn, who seem to really believe in small government (Well, at least in domestic affairs; Mr. Coburn’s enthusiastic support for the abominable Bush “foreign policy” indicates that even his enthusiasm for limited government ends at the seashore, but I digress.). As Mr. Paulson’s enthusiasm for a government bailout for those who got into ARMS with the mistaken supposition that “We can always refinance” and found out that, “Gee whiz, I guess real estate can go both ways,” shows, all that claptrap about “limited government” from the GOP rapidly goes over the side when their constituency, the well-off who ceaselessly extol the virtues of small government, need to reach into the taxpayers’ pockets for their share.

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