The Brookings Institution has an interesting essay addressing one of the key questions about the $700 billion recovery package. If we bailed out the Wall Street fat cats, then why not the little-guy homeowners? It’s a tough question, one I’ve wrestled with all week. I understand on a philosophical level the need to stem foreclosures and the devastation widespread foreclosures wreak on neighborhoods and communities. On a gut level, it makes me angry to think that somehow I as a taxpayer should bail out those around me who made bad financial decisions: the irresponsible homeowners who purchased houses they had no business buying and now can’t pay their bills. The Brookings Institution essay comes out strongly against a homeowner bailout. To read the essay, go here. At the end of a piece about a similar housing/banking meltdown in Colombia, the author sums it up this way: if you reward delinquent debtors with government aid, no rescue package will ever be enough.
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