Friday, October 03, 2008

Quote of the Day

From last night's debate:
"Number two, with regard to bankruptcy now, Gwen, what we should be doing now -- and Barack Obama and I support it -- we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe."

Or, put differently, Obama supports people taking out mortgages they can't pay, then having a judge arbitrarily cancel the debt and force the bank to take a loss.

Aside from the ludicrousness of this from a financial standpoint -- as in, the reason why secured debt like mortgages and car loans from which you can't just walk away in bankruptcy have lower interest rates than do unsecured loans from which you can -- there's this whole other matter of what kind of behavior you're rewarding.

In other words, go buy that $400k house you can't afford; you can declare bankruptcy, ask a judge to reduce it to $200k so you can "afford" it, and have instant equity of $200k.

Meanwhile, that sucker next door to you with a similar house who pays his debts, well.....that's his fault for being responsible.

Update: Corrupt leftist Democrat Maxine Waters confirms even worse.
"When we buy up this toxic paper, we're in charge. We can do the kind of loan modifications we've been urging [the industry coalition] Hope Now to get done. ... We'll be able to set some standards," Waters said during the floor debate.

Put bluntly, what Maxine wants to do is to buy the mortgage the homeowner took out that they couldn't afford for $400k and reduce it to $200k so the homeowner can "afford" it -- meaning you, the taxpayer, eats that remaining $200k.

Again. You didn't overestimate your capabilities. You didn't take out the mortgage. You didn't start skipping payments. You didn't get in over your head.

But as a taxpayer, you are going to pay for all the people who did. They are going to get free equity, and you are going to get stuck with the bill.

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