July 23, 2008
The core housing bill is dangerous because it would bailout big banks and mortgage lenders that made risky bets in the housing bubble – putting up to $300 billion worth of taxpayer dollars at risk. Many argued that the underlying housing bill was built on the entirely unfair premise of forcing 95 percent of Americans (those who rent, own their own homes outright, or are on time with their mortgages) to bail out the other five percent (those who are near or in foreclosure). There are better ways to help the housing market recover.
Congress is now being asked to further expand this taxpayer unfriendly bill to include a breath-taking bailout of Fannie and Freddie. This bailout could put taxpayers on the hook for as much as $5 trillion dollars worth of risk – that’s larger than the economy of every single country in the world except the U.S. or China. That’s enough money to buy 10 gallons of gas a week at today’s rates for every passenger car in the U.S. for more than the next 17 years. In the worst case scenario of these companies completely failing, though unlikely, taxpayers would see the $9.5 trillion national debt explode with the snap of a finger.
When did it become impossible for major companies* to fail in this country? Can't we just let badly managed corporations die the death they deserve so fresh, efficient corporations can move in and take over their business? Of course no; Adam Smith's invisible hand has been replaced by the mailed fist of government and we all know where they're sticking it.
* - Unless they are politically unpopular like oil companies, etc.
(h/t: Boots and Sabers)
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