In case you haven't seen it, check out this clip of CNBC's Rick Santelli calling for a reenactment of the Boston Tea Party, but this time in Chicago:
Santelli was reacting to the Obama administration's plan to stop home foreclosures, a plan which John Berlau of CEI's Center for Investors and Entrepreneurs has called "futile."
Why would Berlau say this? For the same reason that Santelli was outraged on the floor of the Chicago Mercantile Exchange today. The plan isn't likely to keep people in their homes in the long run and, perhaps more importantly, taxes those who acted responsibly while rewarding those who didn't. This is government promoting bad behavior and yet another multi-billion dollar price tag for the taxpayer.
In addition, the plan's goal of avoiding foreclosure "at all costs" is a bad one. As Berlau said in a press release on Wednesday:
"While all foreclosures are difficult, they are sometimes the least bad option for an individual borrower. They allow borrowers to walk away from both the home and the loan, at a cost to their credit rating, but not nearly as big a hit as they would take if they declared a personal bankruptcy.
"Having borrowers continue to pay into a bad loan, even with reduced payments, takes away money they could be using to start over. Redefault rates from existing government-backed loan modification programs indicate that they are often ineffective. And in the case of borrowers facing job losses, staying in one’s home while being saddled with a mortgage can delay the necessary step of moving to an area with more job opportunities."
To read more of Berlau's take on the issue, visit:
Be sure to check out the CNBC clip, it's an instant classic and reflects the mood of many in America who feel their government is just plain out-of-control.
Yours in liberty,
Senior Communications Director
Competitive Enterprise Institute