Bank, Mortgage Bailout A Dark Day For Taxpayers

The federal government is poised for a massive bailout of some of our largest mortgage banks and to help homeowners facing foreclosure land loans that are less expensive. All of that pulls at most folks' heartstrings, and it should in many cases. However, we must tread carefully when making decisions like this that will cost all taxpayers a lot of money.

The U.S. House approved legislation that will allow about 400,000 people facing foreclosure to re-negotiate loans with lenders. Also in the bill, Fannie Mae and Freddie Mac will be rescued in a sea of bad debt.

Most of us are compassionate people who hate to see hard-working Americans lose their homes. Owning a home is the American dream, and a lot of unsavory legal loan sharks took advantage of people who couldn't afford a house. They made their millions and billions, and are no where to be found these days.

Fannie Mae and Freddie Mac were a whirlwind of loaning money to people who had bad credit or couldn't afford a house but bought one anyway. Last year the CEO of one of these banks made somewhere in the neighborhood of $30 million in compensation. This year taxpayers are bailing out his company.

How many of the 400,000 homeowners facing foreclosure were speculators who lost on the gamble? Taxpayers should not be bailing them out of a risky moneymaking scheme. Perhaps the people who just wanted a house and were tricked into unfair loans should be rescued, but the number of people helped should be closely screened.

We can understand that giant banks failing can have terrible consequences, so, perhaps, we just had to save Fannie Mae and Freddie Mac. But remember that the same bankers who wanted no federal regulation when they were wheeling and dealing are now begging for government help. It can't work that way.

There are no good answers to this big problem Americans are facing regarding the credit crisis and foreclosures. Do we help or let the market correct itself? That probably depends on how it's affecting us individually. That always changes our perspective.

What the U.S. government can't do is call in the cavalry every time an industry gets itself into trouble because it was greedy and stupid. We can't afford to do that anymore, unless national security is on the line.

We'll see where this legislation goes in the U.S. Senate. President Bush has already grudgingly said he'll sign it. Let's hope a better version is yet to come.