As the word “bailout” becomes the banking and credit lobby’s favorite two syllables ever (but only whispered behind closed doors, apparently), it’s a good time to ask the question that the New York Times asks in this article, “A ‘Moral Hazard’ for a Housing Bailout: Sorting the Victims from Those who Volunteered“: who’s really to blame here?
Here’s an excerpt:
A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.
The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.
To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.
(Bank of America is the institution, lest we forget, that arbitrarily (at least, as far as we know, since they’re not sharing their rationale) closes down consumer accounts, even without defaults or overdrafts, simply because they think it’s in the “customer’s best interests.”)
BoA’s proposal goes on to state that any solution must avoid the dreaded word “bailout.” They want one, mind you. They just don’t want you to find out that’s what it is.
Read the rest of the article yourself and think about it: what are the ethics of the situation? Does economic health outweigh the message to bad actors that it’s OK to screw up this badly, because your government will clean up after you?
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My comment would alter your concern to the large mortgage company that is mishandling payments an adding fraudulent fees to comsumers account. Countrywide has rejected my request for an internal audit on my account. They have charged thousands in fees and inspections that were never done. My payment history report from Countrywide doesn’t match the cancelled checks from my bank statements. Search the web if you want more reports with the same problem with this company. They have taken advantage of me and other consumers. Countrywide is forcing the consumer to bail out with no other option than continuing to get ripped-off. Countrywide’s foreclosure rate is threatening a recession to our economy. They are simply stealing from their consumers and calling it an economic problem. They steal our payments, next our homes and call it a record high foreclosure rate. I have proof of these charges and fees. I can back up my claim with documents, paperwork, bank statements and cancelled checks. I HAVE THE PROOF.