What about fiscal responsibility?
Re “Housing bailout gains backers,” March 22
Whether or not the government bails out homeowners, it must institute extensive regulations on American indebtedness. Companies buy and package shaky mortgages to use as collateral for securities to be sold to companies that borrow money to buy them; this money is also borrowed from companies that have borrowed money to lend. This inverted pyramid of paper balances precariously on mortgages taken out by the John and Jane Does who cannot afford them if the housing market corrects, as it did and will again.
We also should institute regulations on the credit card business, which works in ways analogous to recent mortgage lenders, encouraging precarious debt with severe penalties for inevitable defaults. The poorly regulated, massive business of borrowing, lending and financial investing is not good for the public, only for the boys (and a few girls) who play the corporate money game.
David Eggenschwiler
Los Angeles
America’s personal savings rate is almost zero, compared with 20% in Europe and 25% in Japan. Just like our citizens borrow more to put off that day of reckoning when the consumption binge has to stop, now our government may borrow more to put off the day of reckoning when housing prices have to fall. There comes a time when you have to take your medicine, and we just don’t seem to get that. We would be much better off as a country if our investment bankers, mortgage lenders and borrowers realized that there are costs to taking on huge risks that they can’t handle.
We seem content to continue to live in a fantasy land in which debts never come due. And, by the way, as a renter who did not irresponsibly buy a house he couldn’t afford, I’m pretty ticked off at the notion that my tax dollars might be used for the purpose of inflating housing prices.
Andrew Healy
Los Angeles
I have saved all my life and now depend on interest income to support my retirement. The Federal Reserve has been reducing interest rates; my income will fall by about 20% in 2008. These reductions were made solely to bail out the sub-prime fiasco and benefit all those who have overextended themselves foolishly. Why should I have to pay for this? I have acted responsibly and now have been hit.
Do not bail out the housing industry. That would perpetuate what is wrong with our entire economy.
Kenneth Jones
Eugene, Ore.
So taxpayers’ money may be used to bail out homeowners who were sold dubious loans by unscrupulous lenders. Where will this tax money come from? I have an idea: Repeal the Bush tax cuts on the top income earners -- you know, the CEOs and bankers who got rich getting us into this mess.
Paul Joseph Gulino
Santa Monica
