Thursday, February 19, 2009

Who Merits an Obama Bailout?

What would Larry Summers have to say to Tony Mills? Tony posted this entry at the end of Ed Glaeser's blog post today on the Obama Housing Proposal.

"I’m just kicking myself for not taking on a mortgage I couldn’t afford when I was offered the chance back in 2005. What was the point of being cautious and deciding to rent instead ? What’s in the bailout package for me ? It sounds as though my job now is to help pay the mortgages of people who shrugged off common sense and plunged into debt up to their necks. The losers have become the winners."

— Tony Mills


mberenis said...

Obama is a great president. His presence is impacting grants like no other president prior. Grant funding for minorities and middle class have increased nearly 10,000% in the past week.

Obama's New Grants
Largest Grant Amounts in History!

epar said...

The point of being cautious in 2005 is that there's no way you could've reasonably relied on government-assisted debt relief by the time you faced foreclosure in 2009. The moral hazard argument might be persuasive when you're talking about saving trillion-dollar financial institutions, but saying that it factors into an individual homebuyer's decision is really stretching it.

I don't know about Tony's job, but Larry Summers' job is to find the least worst solution to a crisis created by failures at all levels of our government and the financial system. Listening to Tony's unhelpful whining about losers becoming winners is probably not worth his time.

Anonymous said...

Congratulations Tony, you're not upside down on your home! The non-GSE buyers with high DTI will enjoy five years of reduced interest rates and a little help on principal in return for continuing to pay the mortgage on home they should rationally walk away from. Theirs is hardly a happy lot but that is one function of government, to take some of the sting out of misfortune, whether induced by fate or stupidity. There's also the possible negative externality of foreclosure.

marvin said...

There's a very good indication that the Obama Bailout plan is working. According to news last June 10, Bailout plan turned a profit" of $1.8 billion in interest payments on the first set of bank loans that were repaid.