Bush and the Mortgage Crisis

George Bush issued a statement on the Mortgage crisis today which was in the best tradition of his administration -- that is surreal. Bush announced that down payments would be lowered, loan limits extended, and greater flexibility in pricing provided." Those are a major part of the policies which helped to bring about the crisis in the first place, as finance capitalists or lenders operated on the principle that money was itself a product to sell without real restrictions and sold it to bad risks (which, barring a depression, is a win win situation for them, in that they get to collect the interest on the loan if it is maintained
and foreclose on the property if it is not).

Bush went on to say that his administration would "jawbone" lenders into not foreclosing (at the beginning of the depression Herbert Hoover held high profile white house conferences where he got industrialists to
promise to maintain jobs to the best of their abilities). Bush then went on to say that the crisis is "modest" in relation to the size of the economy(Hoover's favorite catch phrase was that the economy was fundamentally sound). This may be unfair to Hoover, who was a self-made engineer businessman with great personal achievements before he became president, unlike Bush, although neither president, given their ideological blinders, could do anything with the economic crises they faced except make them worse.

Then came Bush's "compassionate conservatism" aimed at those who are threatened with losing their homes, and the practical policy that some 80,000 more home owners will be permitted to sign up for federal mortgage insurance even if their records aren't so good (mortgage insurance, by the way is, from what I know about it, fairly expensive and, again from what I have know, usually serves to protect families in the event that the major breadwinner dies).

There appear to be a few positives in this, in that Bush, according to the press, seems to be moving toward accepting some of the proposals that Democrats have been calling for, which would enable lower income
home owners with variable mortgages to refinance with government protection, but the Democrats have been pointing (rightly I think) to a crisis which may threaten in the next year a few million home owners, not the less than 100,000 to be directly aided by the program that Bush is advocating.

The administration is making some gestures that it might permit the key federal lending agencies to assist low income home owners, a position that liberal Democrats have been calling for and the administration has opposed (I frankly doubt it, unless the crisis escalates and the coming election intervenes to lead the congressional Republicans to put pressure on the Democrats, but we shall see).

Finally, one should take note of Bush's comment that "its not the government's job to bail out speculators or those who made a decision to buy a home they knew they could never afford....." and understand immediately that the opposite is true. It is under capitalism the government's job most of the time to bail out speculators and since the Reagan deregulation the bailouts have reached spectacular proportions, encouraging speculators to loan money to developers and individuals regardless of the dangers in the smug assumption that the deregulators who let them engage in reckless actions would always be around to bail them, if not their customers, out. Regulating the real estate market to reduce speculation by real estate companies and individuals and providing public housing, rent controls, and other social protections, along with reducing regressive property taxes which greatly increase monthly mortgage payments for low income people (along with high energy costs) is the basis of a serious national housing plan to help working people have housing that is both adequate and affordable.

Norman Markowitz