Should Feds Fix the Housing Market 'Failure'?

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have to agree with you on that

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Jinny of NY 4:42AM August 24, 2009

Flat rate listings and buyer rebates will also help. The consumer is no longer in the dark that they mortgage 6% of a purchase price. They are looking for savings on services provided.
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Flat Rate Realty of GA 9:45AM August 14, 2009

Davis claims that the existence of products that are foolish and antisocial in their impacts constitutes a market failure, but I share the other writers' thoughts that this is just the market for stupid products, which has been around as long as there have been markets.
The really disturbing part, and where the market really fails, is where there is a demand that cannot be met. A great example of this (and a productive response) can be found in the Unemployed Cooperative Relief Organization, which grew in the Great Depression to meet people's need for food. Essentially, food was rotting in the fields while people were going hungry. So someone got the idea of bypassing the dysfunctional market and just working for food. This rapidly grew to feed about 150,000 people, and also helped them meet other needs such as health care. Yes! magazine ran an article about this a couple of years back. http://www.yesmagazine.org/article.asp?ID=1464
We need to be looking for these kinds of positive examples, rather than all this focus on armchair quarterbacking the government. I've written more about this in my blog at www.coopgeek.wordpress.com

Andrew McLeod of CA 6:41PM December 17, 2008

While I share the sentiment that consumers should share some of the burden due to the poor, poor decisions they made, I am also informed enough to know that a single bad apple can ruin the bunch. It is time for the ignorance to cease. Many people need to shut their mouths seeing as they know nothing of which they speak. Is it fair that tax payers have to hold the proverbial bag here and bail out some of the greediest and most selfish people on the face of the earth? No!!!! It most certainly is not. However, the alternative would be much, much worse. Unfortunately, we, the tax payers are stuck between a rock and a hard place. A Bail out would mean our hard earned tax dollars being taken away from us. No bail out on the other hand could potentially mean less jobs, a higher unemployment rate, less revenue, and for those too ignorant to understand, a very bad time for most of those same tax payers. Anyone with a bank account could be severely affected and yes, it is true that our money is supposed to be insured. But, what would happen if those funds were to extinguish themselves too? What happens on Wall Street people affects us all. Instead of spitting out some of the non-sense that is being blurted, please, educate yourselves. Read a little bit and realize that while unfair, this bail out is absolutely necessary. The ones who will be most severely affected will not be those with money....it will be YOU, the average American tax payer.

Christian Estrella of NJ 10:53PM September 29, 2008

"It seems that the industry created and pushed toxic loans, then accused the buyers of "not doing their homework" when things predictably fell apart. But, how is it that the industry (and govt) itself can now claim it didn't see this coming, or that it didn't know what it was doing? Do such ignorant consumers have a higher burden of financial knowledge than builders with in-house lenders, or the past chairman of the Fed. Reserve, or the FBI, for example? Were home buyers more able to use Google to research these companies and the housing market than, say, investors and the ratings agencies that said these loans were good investments? "
Sorry, Carol, but consumers should bear as much responsibility as the lenders and institutions should when it comes to the types of loans they got themselves into. Just as Ben Stein's father said (he's a famous economist and I forget his name), "If it's too good to be true, then it must not be true." I am pretty sure that during contract negotiations many lenders were padding consumers' numbers and selling them on fancy loans. I should know, because when my wife and I were shopping for a home, the lenders were doing the same thing with us. However, when the lender came back and said our monthly mortgage rate would be $2100 a month, we walked away. Why did we walk away? Because before we started shopping for a home, I established that the maximum we could afford monthly was $1500 a month. Now several consumers that were in my position could've done the same and it does not require a lot of financial understanding when it comes the final monthly payment that you will have to pay. If you can't afford it, then should we the taxpayer be responsible for your foolishness to pick it up. Yes, the lenders are to blame, the government is to blame, but you better believe that the consumer MUST share some of this burden.

Chris of AZ 2:12PM February 28, 2008

Donald Luskin has it right! Each individual purches a house or any investment with the thought in mind, they will be able to sell it for more then they paid for it! They would not pruchased it without that thought! This is a free country, buyers have the right and responsibility to make the decision! If they have the right to make money and keep the money from a house purchase, then they have and obligation to be responsibal for and losses! The Federal Government (tax payers) are not "baby sitters" to dole out tax revenues to people who made bad decesions! I say "No bale out"!

ron of WA 2:25PM February 26, 2008

Dear James,
It would be ridiculous to hastily resort to a bailout while many free market solutions are widely available. I would like to keep your audience aware of our efforts. FAQ #11 at the home page of www.SwapRent.com maybe the most directly relevant.
Fed Chairman Bernanke has also suggested innovations using shared appreciation and/or variable maturity mortgage products concepts by the private and public sectors in his letter to Senator Schumer on August 27th last year. He reiterated that suggestion again at the House Budget Committee hearing a few weeks ago. Few seems to have taken his open call for actions seriously.
Wouldn't innovation be a better way to devote intellectual reources?

Ralph Liu of CA 1:00PM February 26, 2008

I volunteer for a consumer org that hears thousands of builder complaints annually. In recent years, many complaints of seriously shoddy construction and breach of warranty involve mortgage fraud or predatory lending, and appraisal fraud, too, especially if the buyer used the builder's lender. Because the mortgage issue has thus necessarily become another issue our org deals with, we've read and researched extensively on the "mortgage crisis."
It seems that the industry created and pushed toxic loans, then accused the buyers of "not doing their homework" when things predictably fell apart. But, how is it that the industry (and govt) itself can now claim it didn't see this coming, or that it didn't know what it was doing? Do such ignorant consumers have a higher burden of financial knowledge than builders with in-house lenders, or the past chairman of the Fed. Reserve, or the FBI, for example? Were home buyers more able to use Google to research these companies and the housing market than, say, investors and the ratings agencies that said these loans were good investments?
If there is one direction to look for blame in all of this it's the industry which perpetrated this scheme on America. Standing right next to the industry and probably equally to blame is the govt who looked the other way when consumers were complaining of these practices years before the housing market crashed. They had the chance to stop it then, before such damage was done to the economy, and didn't act. Later when banks and investors complained, law enforcement "cracked down on mortgage fraud," but way too late!
Our org was one of many predicting these exact results years in advance. And, we were not listened to, because all involved in creating the bubble were too busy making their illicit profits, all thinking they'd get out before the music stopped. Now that the music has stopped, some crooks and idiots who got left without a chair want the govt to bail them out at tax payers expense. When I read about the bailout plans I see almost overwhelmingly that the reader comments indicate the American public sees right through this scam.
Whoever ends up as the next president better pull his or her head out of his or her nether regions and address the fact that this country knows who the perps were. So farm I see a lot of denial on the part of candidates, and/or fear of offending powerful industry lobbyists by speaking the truth.

Cindy S of OK 5:13PM February 25, 2008