Freddie Mac & Fannie Mae~~"Let them fail"

[DanCookson]

'Let them fail'

Government bailouts of Freddie and Fannie like giving candy to problem children

"Let them fail," says Libertarian Party spokesperson Andrew Davis, referring to the mortgage institutions Freddie Mac and Fannie Mae, who the Bush administration has said it plans to rescue from financial collapse.

"Let them fail, and let them learn from their mistakes on their own dime," says Davis. "Bailing out these two institutions will only delay the inevitable outcome of any financial firm insulated from the market by government backing. The long run damage of continuing a policy of bailouts far exceeds any short term woes in letting the market consume failing institutions."

The Libertarian Party is calling for an end to government bailouts, which it equates to nothing more than welfare for businessmen.  The Party believes that government support of these institutions decreases the incentive to make responsible decisions, and unfairly socializes the risk--putting taxpayers on the line for costly mistakes.

"It's like giving more candy to problem children," says Davis. "Lenders should recognize that there are repercussions for risky loans, and borrowers should realize that there are consequences for taking loans they can't repay. If it's financial collapse, or having your house foreclosed--so be it. It's bad economics to remove the incentives, even if they are negative, which encourage sensible and responsible decisions."

The Party says Freddie and Fannie should be fully independent of government support, and subject to the same levels of market competition other firms face.

"I could not agree more with the editorial page of yesterday's Financial Times when it said that the current structure of these institutions cannot be maintained, and that government should prepare a 'decent burial' for them," says Libertarian Party National Chairman William Redpath.  "Freddie and Fannie are not needed for mortgage finance in the United States.  No credible commentator thinks that the failure of these two institutions would add even as much as one percentage point over the long-term to mortgage rates.  Congress and the President need to quickly move Fannie and Freddie to privatization with no strings attached to the federal government and taxpayer."

The Libertarian Party is America's third largest political party, founded in 1971 as an alternative to the two main political parties.  You can find more information on the Libertarian Party by visiting www.LP.org. The Libertarian Party proudly stands for smaller government, lower taxes and more freedom.

[frawin]

Dang it Dan, I think you broke it, noone has posted in an hour

[Diane Amberg]

Nah, not broken, just softened a bit in the heat. I haven't decided how I feel about this one. I know people who never should have gotten mortgages were given "liar loans", but I need to think about it to really decide how I feel about this one.

[DanCookson]

I agree Diane, it is a tough one, but I am sooooooo sick and tired of my tax dollars getting spent to bailout people and businesses that have no accountability.

If I don't manage my business responsibly, then who is going to bail me out??  Just tired of the "system" getting the blame and the common working people getting the shaft.

Failure, bankruptcy, etc.... is all part of common economic rollover.  I feel bad for people that lost and continue to lose their homes but at some point there has got to be some personal responsibility for the decisions one makes.

[frawin]

Well said Dan.

[Wilma]

What about the responsibility of the firms that give a loan to a person who clearly does not qualify for it.  Whose credit record is so low you can't even find it in the dumps and whose job does not pay enough.  Then when said person cannot make the mortgage payments, whose responsibility is it then?  And why should the government, us, bail out said firm?  How are we benefiting?

[frawin]

Wilma, I think that was Dan's exact point.

[DanCookson]

What about the responsibility of the firms that give a loan to a person who clearly does not qualify for it.  Whose credit record is so low you can't even find it in the dumps and whose job does not pay enough.  Then when said person cannot make the mortgage payments, whose responsibility is it then?  And why should the government, us, bail out said firm?  How are we benefiting?

That is my point Wilma...I don't want those companies or those people bailed out.  I am for personal accountability.  Last time I got a loan, nobody forced me to sign the paperwork.

Qualify or not, I do not believe it is right to blame a business for giving someone a loan.  It is the person that takes on that loan that needs to be held accountable.  Nobody forces them into taking a loan or signing that paperwork.

That is just my viewpoint.  I just wish there was more people out there that would take responsibility for their actions and not blame someone else for all their woes.

[Diane Amberg]

That's what bothers me too, I guess. Some people were given a huge line and a lot of baloney that they believed. Then when it fell apart, reality rose up and bit them like a shark. In the end, I too feel bad for them, but they did make the decision. There are many many people out there who really aren't bright enough to handle the details of complicated financing and I'm afraid they will always be victimized, but I don't want to have to pay for it either. Actually, the rating companies that I think caused a lot of this credit crisis should be held accountable, but I guess they are untouchable. I saw that myself when we decided to look at changing our car insurance to save some money. Our credit rating to get car insurance was much different from a standard  credit rating  from one of the regular big 3 credit rating firms like Experian. They didn't have to explain why either. It's hard to figure out where to drop the hammer when fraud is involved.

[flo]

things are tight for everyone, but if government starts bailing out these mortgage companies, who's next and where does it end?  They loaned the money by their own rules and criteria, sorry if it went sour but that's not the whole country's problem, that's their problem.  So you bit off more than you could chew simply because you could get the money and now you find your job won't pay enough to live your lifestyle AND make the mortgage payment.  Sorry, you should have done your paper work before deciding you needed that large expensive house NOW instead of when you could afford it. Again, not the whole country's problem.  Should the government bail out fannie and freddie?  NO WAY