Quote For The Week
On Thursday, I read an article by MarketWatch’s Greg Robb that talked about how economists are differing in opinion regarding legislation sponsored by House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, that is intended to make it easier for homeowners to refinance their loans and stay in their homes. The program would substantially relax the Federal Housing Administration’s standards to reach struggling borrowers who otherwise would be considered ineligible for a government-backed mortgage. Homeowners would have to show they could make payments on a refinanced mortgage, and lenders would have to agree to take significant losses on the existing loans. The committee, which claims the program could help 1.5 million homeowners who are having difficulty paying their mortgages, is expected to approve Frank’s bill this week.
In his piece, Robb noted that many economists are arguing this housing “bailout” bill is unfair. In fact, Paul Kasriel, chief economist at Northern Trust Company in Chicago, said:
Once again we are punishing people who followed the rules. There is no such thing as a free bailout. To think that we can continue to simply issue more debt and the rest of the world is gladly going to buy it at attractive rates to us… I kinda doubt it.
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