President Obama is correct in blaming “the failed policies of the past” for the cause of our economic pain. Progressive social policy-makers determined that everyone ought to have a home. The problem was, in the free market place, home ownership is determined by supply and demand.
For example, a capitalist would not loan money to a poor credit risk or individuals with no money down, or for progressive social-engineering policy purposes. A progressive, however, will back these risky loans with taxpayers’ money. So, progressives encouraged and demanded banks and federal agencies (like Fannie Mae) to lower lending requirements to include low-interest “teaser” loans and no-money-down loans.
Yes, some lenders took advantage of the new progressive regulations, but it was progressives who put the new lending regulations into place, not capitalists. This is exactly what got us into this mess.
Unfortunately, interest rates rose to cover the higher risks associated with these risky loans. Higher interest rates caused payments on variable loans to go higher than most of these new home buyers could afford.
As defaults are made, home prices begin to drop. The no-money-down buyer found that they were now upside down while making payments on a home that was now worth less then what they paid. With no equity in their homes, they walked away, causing more foreclosures and a further decline in home values.
Progressives felt good about themselves and the good they thought they were dong. But many of the new homeowners progressives were trying to help are now no longer homeowners and were left financially devastated, as their credit is ruined and many have filed bankruptcy.
Lets stop letting progressives tinker with our economy, because the unforeseen consequences can be devastating.
Lester W. Shirley
This is in response to Pradeepta Chowdhury’s letter to the Tribune-Herald on Sept. 15 regarding Mazie Hirono.
Needless to say, it was rather shocking to hear such disparaging and sarcastic remarks from Mr. Chowdhury. His indictment of Mazie was disrespectful and overlooked Mazie’s strength, experience and willingness to work with colleagues across the political divide.
Linda Lingle’s ads are scripted rhetoric filled with platitudes we’ve all heard before. And lest there be doubt, if elected, Lingle would be in the Republican camp of “just say no” to anything that might be considered “liberal” legislation helping to unify the country. I’m with Mazie.
Linda Damas Kelley