Another Week, Another Bailout

On Wednesday, President Barack Obama went to Arizona and announced another huge spending package by our federal government. This one is to assist home mortgage defaults and it is to the tune of $75 billion.

We had the first bailout last year to the tune of $850 billion followed by the automobile bailout, then the "Stimulus" package of $873 billion and now this. General Motors and Chrysler both say that they need additional billions to avoid bankruptcy.

Is there no end to the growth of government, because that is truly what all of these are about. The automobile industry will be told what type of cars to build and untold other restrictions. They had to present a detailed plan to Congress on how they intended to spend this money. I am still waiting for the detailed plan by Congress on how it intends to spend all this money. I find it rather fascinating that Congress can arrive at a totally uneven number for a certain organization, but no one can say how it arrived at the figure.

With this latest bailout, banks will be told how to make loans. If my memory serves me correctly, that is one of the major causes for our current dilemmas. The Community Reinvestment Act was passed during the Carter Administration and increased during the Clinton Administration. That bill demanded that banks provide loans to people that they normally would not approve because of income or credit history. Congress decided that all Americans had a right to own a home and put pressure on the banks to lower their standards for making loans. The Housing and Urban Development Administration (HUD) placed quotas so that banks were investigated if they did not meet them as defined by HUD.

Congress seems to think that everyone should be given the same interest rate for loans regardless of their ability to repay them. An analogy would be for gamblers to place the same odds on the winner of any sporting event or race regardless of the participants' previous history or record. They would not be in business for very long, and banks are in the same category. Some people are a good risk and others are not.

I accept the fact that everyone should be able to live in a decent dwelling, but some people do not have the ability to support the ownership of a home. If one rents, then the landlord is responsible if the furnace or air conditioning goes out. Keeping the house in order with paint, trash, lawn care and numerous other requirements all cost money that a homeowner must pay, but a renter doesn't.

The president said in his proposal for the $75 billion bailout that it was time for individuals to take responsibility for their actions and live within their means. That is great, but why does he continue to support those who fail to do that? Money is being sent to assist various states and, in too many cases, those states continue to spend without regard to the current circumstances. The only things that sate and local governments ever talk about cutting are police, firefighters and education. Staffs at the headquarters are seldom reduced or only for vacant positions.

The president also said that homeowners could not continue to expect that property values would continue to appreciate 20 or 30 percent each year. He also should have said that governments should not expect to grow at huge rates each year either as they have in the past few years.