Wayward lenders, borrowers must be free to fail

Monday, July 28, 2008

President Bush gave up opposition to the bailout of Fannie May and Freddie Mac, agreeing to sign the legislation before it was overwhelmingly passed by Congress.

Both parties had a stake in the issue during this election year, neither wanting to have the albatross of a failing economy hung about its neck during an election year.

The question is, what would the three branches of government done it it were not an election year?

The answer is, probably the same thing.

The reason? Too huge a chunk of our national product depends on the six trillion dollars of housing loans held by the pseudo-private lending institutions.

With the price of oil already dragging down consumer spending and the chain of business sectors that depend on it, the United States simply couldn't afford to let the failure push us into a Depression.

The true test of Washington leadership comes now that the crisis is past, however.

Will the major parties have the courage to hold those who were responsible for the sub-prime mortgage mess to account?

Will one side admit to kowtowing to special interests wanting to cash in on the seemingly unending housing boom, and failing to supply to modicum of regulation that could have prevented the crisis?

Will the other side admit that the free market is ultimately superior to anything federal control can accomplish, and allow it to function?

Freedom to fail is one of the key liberties of our American system.

Taxpayers are now being forced to co-sign housing loans which should never have been granted in the first place. Those who took advantage of would-be homebuyers without the means to repay their mortgages should be held accountable.

After that, Washington should be quick to restore homebuyers' freedom to take responsibility for, and bear the consequences of, their own actions.

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