Hold on a minute! I thought this was a capitalistic society run by companies and a free market. All of the sudden MY money, YOUR money, and OUR CHILDREN’S money is being used to purchase home mortgages and an extremely large insurance company. What’s next, banks? Oh wait, didn’t the Fed bail out Bear Stearns 6 months ago?
Are we heading towards socialism? I know that sounds like a conspiracy theory, but look at the facts. Let us look at Freddie Mac and Fannie Mae, the two largest mortgage-backing companies in the US. Freddie and Fannie don’t make the loans, they buy mortgages on the secondary market, pool them together, and sell them as mortgage-backed securities to investors on the open market.
Home values have been on a constant increase over the past few years. Some areas like Las Vegas and California saw incredible gains in property values, until 2007. Things started to correct themselves (yes, I said CORRECT themselves), meaning the same 2-story house you could buy in Bizmark would go for $1 million in California. So the media calls this a “Mortgage Meltdown” and fills their 24-hour programming with stories of unfortunate homebuyers who signed up for sub-prime interest only loans with nothing down and the hard times they are falling on because they could no longer afford the payment after the 3-year arm adjusted. The value of the property decreases (more likely that it “corrected”) and they now owe more than the house is worth. So they can’t make the payments and either short-sell the house or let it go into foreclosure.
So the government steps in the save the day. Let us take taxpayer money (or increase the national debt even more) and buy these mortgages because things will be bad if the free market has a couple of tough months. By the way FHA and VA loans are also government run mortgage programs. Monopoly?
So now the government is helping bail out investment banks, holding mortgage notes, and is now loaning (and owning 79.9% of…) AIG billions because “These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy.” – White House spokesman Tony Fratto.
Let the market stink for a while, then get it’s strength to come roaring back like a bull as it has many times in the past. Let people help people in need and let the government do what we put them there to do – GOVERN, not OWN.