John McCain believes that the federal government has no responsibility to help homeowners who were bamboozled into taking out mortgages they couldn't afford. For him, it's not just a policy issue, it's philosophical.
Sayeth the Senator:
"I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," he said.
Of course, the government bails out and rewards people who "act irresponsibly" every day.
• The government pays for health care for people who engage in risky and dangerous behaviors like smoking, or excessive consumption of the 1070 calorie Burger King Double Whopper with Cheese and its 70 grams of fat, or dozens of other actions that place a crushing financial burden on others.
• The government - since 1933 and the establishment of Social Security - comes to the aid of people who live gluttonously and irresponsibly during their working lives, leaving them without a retirement safety net.
• The government helps to re-build the houses of those who choose to live irresponsibly close to flood zones and areas where hurricanes are wont to visit.
• The government comes to the rescue of those who invest irresponsibly in the equity and fixed income markets by allowing them to write off their losses. Every dollar thusly deducted as either a short- or long-term capital loss has to be made up by taxpayers who acted more responsibly.
• The government allows for bankruptcy protection for corporations and individuals who conduct themselves in a fiscally irresponsible manner. And by doing so, by allowing them to wipe the slate clean, they place a financial burden on million of debtees.
By the way, the concept of forgiveness for people who live irresponsibly goes back to the Old Testament, specifically Deuteronomy 15:1-2 which provides for a release of debt every seven years.
This is the manner of remission: every creditor shall release what he has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the LORD'S remission has been proclaimed.
But what's good enough for the fifth book of the Torah isn't good enough for the unforgiving Senator McClain, who seeks to exact a very unbiblical punishment upon sub-prime sinners.
I - and you - could go on and on with examples of how the government gets our back when we do dumb things. The idea that the government has no place in bailing people out from their stupid decisions is wrong from both an historical and a moral perspective.
That's not to say that we should be a society in which individual responsibility doesn't matter, that government should always be there to catch people when they fall. But to take the unalterable position Senator McCain has, that the government has no duty whatsoever to those who are trapped in mortgages they can't find their way out of, is dumb, insensitive and not born out by history.
We're not talking about a few people whose greed got the better of them. We're talking about an entire swath of homeowners who were misled, if hot hoodwinked, by the cooperation of complicit mortgage brokers, lenders and appraisers who didn't care about the credit-worthiness of the buyer as long as they could slice-and-dice the mortgages and sell their collateralized Vegematic output in the secondary market.
The billions of dollars that is currently residing in broken mortgages is the worst catastrophe of its kind since the Great Depression. Last time I looked, it was Hoover's obliviousness to the tumbling world around him that has become synonymous with blinkered, economic failure. Why would McCain seek to repeat history, especially when he is the candidate best equipped to remember it?
In fact, Allan Blinder, professor of economics at Princeton and former Vice-Chairman of the Federal Reserve, has advocated for the establishment of today's equivalent of the Home Owners' Loan Corporation, or HOLC, created by FDR during the Great Depression to save "irresponsible" homeowners from foreclosure through purchase of their exiting mortgages and the issuance of new, more affordable ones.
"The scale of the operation was impressive. Within two years, the HOLC received about 1.9 million applications from distressed homeowners and granted just over a million new mortgages. (Adjusting only for population growth, the corresponding mortgage figure today would be almost 2.5 million.) Nearly one of every five mortgages in America became owned by the HOLC. Its total lending over its lifetime amounted to $3.5 billion -- a colossal sum equal to 5 percent of a year's gross domestic product at the time. (The corresponding figure today would be about $750 billion.)
As a public corporation chartered for a public purpose, the HOLC was a patient and even lenient lender. It tried to keep delinquent borrowers on track with debt counseling, budgeting help and even family meetings."
Listening to and reading Senator McCain's remarks, which are both callous and economically dunderheaded, remind me that his maverick, straight-talk veneer masks an ugly interior.
While his books are all titled with flag-wrapped, industrial statements of purported patriotism -- "Faith of My Fathers"; "Hard Call: The Art of Great Decisions" and "Why Courage Matters: The Way to a Braver Life" - John McCain's recent performance leaves one title as yet unwritten: "The Courage of Foreclosure: Why You're a Better Person After the Bank Takes Your House."