FOR IMMEDIATE RELEASE
August 17, 2007
Contact: Timothy H. Lee, Esq.
703.535.5836
CFIF Condemns Massachusetts Bureaucrats' Misguided Subprime Mortgage Bailout
Proposal
$250 Million Plan Would Merely Reward Recklessness, Encourage Similar
Future Behavior and Punish Massachusetts Taxpayers
Alexandria, VA —
The Center for Individual Freedom (CFIF)
today lambasted a dangerous plan by Massachusetts officials to waste $250 million
of state taxpayers' money by bailing out careless subprime mortgage lenders
and their reckless borrowers.
Under the plan, initially concocted by Governor Deval Patrick and the Massachusetts Housing Finance Agency (MassHousing), taxpayers would subsidize the refinancing of subprime loans for delinquent borrowers, thereby excusing them from the natural consequences of their voluntary risks. Additionally, the plan would apply hardball negotiating tactics to lenders, forcing them to accept a financial hit on the mortgages that the state will refinance.
Politicians in other states, including California, New York, Pennsylvania, Illinois and Ohio appear poised to implement similarly destructive measures, increasing the cause for alarm.
"Although the desire to assist subprime borrowers may exhibit generous intentions, it will do far more harm than good, and make a manageable problem dramatically worse," said Timothy Lee, CFIF's Director of Legal and Public Affairs. "Instead of targeting and punishing the very small number of predatory lenders who actually engaged in improper behavior, and allowing our healthy market economy to complete its current process of self-correction," Lee continued, "state bureaucrats seek to introduce more government bureaucracy and punish hard-working taxpayers."
"Even worse, it is simply unfair to force working taxpayers to subsidize reckless lenders and borrowers for their own poor choices. Ultimately, this will send the wrong message by encouraging similar irresponsible behavior in the future across all sectors of the broader economy," Lee stated.
Mr. Lee pointed out that the so-called "subprime lending crisis" is itself exaggerated, as fewer than 1,000 Massachusetts homeowners would even benefit from the proposal. Only 5% of American mortgages are subprime loans, and fully 85% of those subprime loans are paid on time.
Alarmingly, the legislature appears poised to rubber-stamp the Governor's plan. "This creative but cynical effort to ram their plan down taxpayers' throats sets a toxic precedent," Lee said.
"Simply put, this proposed bailout is a poisonous idea for Massachusetts citizens. It constitutes an easy political score on an overhyped problem that is already correcting itself, it immorally rewards reckless behavior and it encourages similar irresponsible behavior in the future," Lee concluded. Accordingly, CFIF calls upon Massachusetts taxpayers, families and businesses to act immediately to stop this dangerous proposal in its tracks.
The Center for Individual Freedom is a non-partisan constitutional and free-market advocacy organization that fights to advance the principles of limited government, and to protect individual freedom and rights in the legal, legislative and educational arenas.