Black Box Report

Mike Gravel, for a Crazier America:

I can't understand why he didn't do better in the polls...

The Senate has reached an agreement on a bipartisan bill to help with the foreclosure crisis. Hooray! Better late than never, right?

Well, not necessarily. The biggest beneficiaries of the bill are not owners facing foreclosure, but the companies that built the homes these people can't pay for:

Let's just review exactly what the homebuilders did during the boom. If you look at their balance sheets and cash flow statements, you will see that the majority of them borrowed heavily to finance purchases of land so they could build spec houses to capitalize on the frenzy in the housing market. They made oodles of money, their executives were paid handsomely, insiders sold their stock and of course, they paid taxes. Management chose to ignore the well-known fact that homebuilding is an extremely cyclical business and they decided to make the most money they could possibly make, leveraged to the hilt without any thought to what would happen in the downturn. My question...: What exactly is wrong with letting some of these jokers go out of business? Honestly, if our government had an extra $6 billion sitting around, maybe I'd be okay with giving them a tax break. But we don't, so our government needs to start prioritizing.

So, $6 billion to help out irresponsible homebuilders, while homeowners facing foreclosures get...$100 million. In counseling services. From companies the IRS stripped of their tax-exempt status for deceptive and fraudulent practices with the very people they're ostensibly counseling. Nice priorities:

I don’t like this at all. $500-$1000 tax break and credit counseling with corrupt companies for homeowners , and a huge break for homebuilders that ignored the housing bubble in the first place, because they were too damn greedy and stupid to look at the signs in the first place...I'm not saying that all of the points in this legislation is bad, but what is being billed as helping the troubled homeowner is not all that much help.

Naturally for conservative blogs, any help for any of these groups is too much. Here's Cap'n Ed at Hot Air today:

Congress has no business bailing out people who took foolish risks in the housing market anyway, and this looks like a bunch of politicians in an election year pandering for their incumbencies. They have taken tax money from people who didn’t take the foolish risks to subsidize the results of bad decision-making. That only produces more folly later, as speculators will come to expect DC to bail them out of the next crisis as well, rather than suffering the consequences of stupidity in the market.

Stupid Bailout!

Now, here's Cap'n Ed at Hot Air two weeks ago:

How will the Fed and the Treasury deal with this structural problem in the mortgage markets? Congress and the White House will probably determine a system to identify actual homeowners from speculators and devise some sort of relief package. Politically, it makes more sense, and in a way it addresses the core problem more than simply providing guarantees for the lenders who created the problem by overselling credit. Speculators and flippers heightened the risk and gambled knowing the consequences of failure.

Is that the right thing to do? As William Polley told us on Monday on our podcast, extreme crises sometimes require intervention. However, it does make it more difficult for free-market advocates to argue against statism in economics. In an election year, however, people win re-election by taking action, not by standing around watching events unfold.

(Emphasis mine)

This demonstrates a few things: 1) Since George W. Bush isn't up for re-election, he couldn't care less about "taking action," and has been "standing around watching events unfold" like nobody's business; and 2) Ed Morrissey has all the intellectual consistency of a used car salesman, and apparently doesn't read his own posts.

But then, blaming the victims has been a staple of conservative argument since time out of mind:

Republican senators apparently have decided they should help out average people because it's hard to justify not doing so after the Bush administration bailed out Bear Stearns.

Besides the sheer hypocrisy of helping rich corporations and not little people, there are other good reasons.

...a lot of people got into this mess through no fault of their own. Mortgage companies did not always fully disclose what would happen to adjustable rate mortgages in the future, for example.

Or people may have thought they could refinance their adjustable rate mortgages to something lower...only to find out that the mortgage crisis has made refinancing more difficult.

Or they may have lost their jobs, had unexpected medical bills not covered by insurance, or gotten a divorce. In such cases, hanging onto a house that is worth much less than what is owed on the mortgage is difficult when the payments become unmanageable.

Perhaps the homeowners should have foreseen that prices would drop. But when the real estate agent and lender are telling the buyer the deal is a good one, a less sophisticated buyer is likely to trust their judgment. After all, they're the experts, aren't they?

No more so than, say, Cap'n Ed and the Wizards of Wall Street.

And if a bailout is good enough for those clowns, it's good enough for everyone.