Inland Empire leaders fear a bailout wipeout
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There’s an excellent piece in today’s Wall Street Journal reporting that business leaders in the Inland Empire are worried that the federal bailout could do lasting damage to the area’s housing market.
The specific fear, according to the Journal, is that bulk purchase of foreclosed properties, and bulk sales to investors, will lead to a sharp drop in home-ownership in the area:
‘We don’t want the cure to be worse than the disease,’ said Steve PonTell, a business owner in the vast area east of Los Angeles known as the Inland Empire. He said he is worried that neighborhoods could be seriously damaged if the Treasury ‘dumps’ real-estate assets in such a way that leads to absentee ownership. Government representatives in the area are now scrambling to muster support for a federal bill that would allow local businesses and governments to buy up some of the real estate to make sure it doesn’t fall into the hands of speculators who have no stake in the community. The bill, introduced Sept. 27 by Rep. Gary Miller, a Republican who represents some of the areas in Southern California hurting from the mortgage meltdown, promotes the formation of regional public-private partnerships that could buy homes in their geographic area from the Treasury. This approach, they argue, would help stabilize neighborhoods and maximize financial returns to taxpayers.
Two cents: Interesting stuff. This is one of the problems with government intervention: It invites even more government intervention. So the government bailout might cause unintended consequences? OK, let’s form regional government partnerships to diminish potential problems from the federal government’s actions.
-- Peter Viles
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Hat tip: Todd in Weho, and others. Thanks.
Photo: Los Angeles Times