How Quickly We Forget Then Repeatby Tim Manni
Do you remember as far back as July? It was only seven months ago that President Bush signed the Housing and Economic Recovery Act, billed as the ultimate solution for the mounting housing crisis. That bill — which has been out of the news for months — cost taxpayers $300 billion.
Considering that Bush’s bill was released with much fanfare and anticipation, it speaks volumes that Obama’s bill — striving to re-accomplish many of the same goals — would need to be crafted only months later. It would lead you to believe that it didn’t work, forcing Washington to abandon their previous housing legislation for a new one. If that’s the case, where did all that money go, and why are we willing to go down that road once more?
Despite some differences, the general goals and parameters of the two bills are essentially the same (i.e. stemming foreclosures, increase loan modifications, expand Fannie and Freddie). Why are we willing to continually throw money at the same problems?
“Is more money really the solution?” asks HSH Associates VP Keith Gumbinger. “The process is proving to be unmeaningful. It’s only leading to a complete distortion of market forces. ”
Lawmakers continue to invest in loan modifications as well as other costly incentives for at-risk borrowers at the expense of healthy borrowers.
Lastly, both bills have seemed to stir up the same emotions in homeowners who are sick and tired of paying for others’ mistakes or misgivings.
Is Washington setting itself up for failure — or will this time be different?