New York Senator Charles Schumer wants to throw some compassion (and money) to consumer groups to bail out troubled homeowners. Its a noble gesture that will certainly help some people, but its really just a drop in the bucket. Salve in the wound so to speak.
Here is my problem with this sort of throwing money at the solution solution:
- The idea of government providing help to its citizens have a very recent bad history (remember the extra FEMA trailers for New Orleans?)
- The amount proposed has got to be a fraction of what is really needed as evidenced by the nearly 30 subprime lenders that have gone out of business in the past 2 months.
- I would imagine that not every one of people hurt by subprime lenders, were unaware of the gamble they were taking. At what point does personal responsibility start?
- And most importantly, this will virtually guarantee that if this bill is passed, a few years from now we will read about how the money was mismanaged.
In the rush for profits and lack of supervision, subprime lending will have a lot more to answer to in the future. Pointing the finger is a natural reaction to this and its deserved, but it doesn’t change the system. A lot of people were hurt, and so far, no meaningful discussions on how this could have been prevented have taken place.
If you haven't already, sign up for
'Housing Notes' to receive weekly insights and research. 
Concise,succint and dead on point !!!!