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July 28, 2008 2:16 pm

Mortgage bailout not a good choice

Written by Tribune Staff

The U.S. Senate on Saturday passed a mortgage bailout bill aimed at helping lenders and homeowners hit hard by plummeting real estate values. President Bush is expected to sign it by mid-week.
The bailout represents an expensive taxpayer rescue of semi-private corporations that gambled under the belief home prices would continue to soar. And they lost.
This Congressional lifeline is bad policy. The federal government shouldn't be in the business of bailing out corporations.
By bailing out mortgage giants Fannie Mae and Freddie Mac, supporters of the bill hope to increase consumer confidence and slow the downward spiral in the real-estate market.
Figures released last week saw foreclosures up 121 percent from this same period last year.
But many economists and analysts say the infusion is unlikely to help reverse the real-estate crisis. One analyst went so far as to say the $300-billion allocation is “just a drop in the bucket.”
More important, Fannie Mae and Freddie Mac don't have to pay for their own misdeeds. Taxpayers do.
These behemoth lenders greedily took inexcusable risks by making loans to people who weren't capable of repaying them. The majority of lending institutions, not to mention other private sector businesses, have to live with their business choices. And some fail.
This bill is a $300 billion Band-Aid to rescue companies that let greed override sense.