On This Week, Rich People Lecture The Poor On Moral Hazard

On today's This Week With Mickey Mouse, a variety of well-heeled people join in a hearty chorus of "What Do The Simple Folk Do?". Isn't that nice! JONES: Well, then why -- it's certainly not being revealed. But hold on a second. This is

2 years ago by David
up

On today's This Week With Mickey Mouse, a variety of well-heeled people join in a hearty chorus of "What Do The Simple Folk Do?". Isn't that nice!

JONES: Well, then why -- it's certainly not being revealed. But hold on a second. This is the kind of stuff I think that turns people off from politics. I mean, this is exactly the problem we have right now. Ordinary people don't care about this stuff. And the stuff that regular people care about more than anything is, you know, their houses. Right now, one third of the people who are watching this show, their homes are under water.

It used to be, they were talking about the good old days earlier on the show. It used to be when you signed that mortgage check, you were building wealth for your family. You got a third of Americans who are losing wealth, and in Washington, D.C., the big story that was missed, you got Ed DeMarco, a Bush administration holdover, who is still being held on to by Obama, who sits back and says, Fannie and Freddie are now--

STEPHANOPOULOS: He's the head of the Federal Housing Administration.

JONES: The Federal Housing Administration.

STEPHANOPOULOS: Oversees Fannie and Freddie. Fannie and Freddie came up with a report that said if they just reduced some of these mortgages and gave some mortgage relief and stopped overcharging people for their homes, America would save $1 billion in foreclosures and you keep people in their houses. This one bureaucrat says, no way, takes it off the table. That's wrong. That's hurting ordinary Americans. It's not even being talked about in Washington, D.C. President Obama should fire Ed DeMarco, get him out of there, but somebody in office is going to take care of the real issues. The American people can't continue to lose their shirts trying to get people to stay in their houses.

(CROSSTALK)

STEPHANOPOULOS: -- didn't do more about that? I know he disagrees, I know he disagrees with Ed DeMarco, but he didn't take action.

RATTNER: Well, look, the housing situation is one of the most complicated policy issues we have, because we all would like to do more for homeowners, but I think there's a feeling in America, which I understand, of sort of equity in the sense that someone who overborrowed, who took out a second mortgage, used it to buy a new television or consume, is now under water, is living next door to somebody who acted responsibly and didn't take out a second mortgage. And so this is a highly emotional issue in Washington.

What he means is, the "responsible" people who had well-paying jobs and enough inherited wealth that they didn't need to use their houses as ATMs to cover up the declining purchasing power of their paychecks.

JONES: The great thing about the report that came out was, if you narrowed it to people who are not in that situation, you would actually save $1 billion for America. So you've taken it off the table, you're not talking about people who overborrowed. You're talking about the responsible people. They can't get help from this administration, they can't get help from Washington, D.C. That's why you are going to have underwater voters sitting out this election in droves. That hurts the president. And their inability to be a part of the economy hurts the economy. You've got more jobs created--

I get the political strategy behind what Van Jones is saying, but to divide distressed homeowners into "good" (responsible) homeowners versus "bad" (irresponsible) ones is, in face of the overwhelming evidence of fraud and corruption on the part of the banks, rationalizing class war. We already know that black homeowners who qualified for traditional mortgages were steered into the subprime markets. This is not a matter of rational dispute.

COULTER: -- families. I think they're whole house flippers. You noticed that in the housing crisis -- they won't give you the numbers. How many of these houses that are under water are second homes. But noticeably, all the housing crisis hot spots -- Arizona, Nevada, California, Florida -- not New York City, it's the hot spots--

(CROSSTALK)

WILL: 75 percent of mortgage holders who are under water are continuing to pay their mortgages. If you go to them now with competitive debt forgiveness -- the president saying that maybe student loans should now be forgiven. Now we're going to start forgiving this, breaking contracts -- in a sense what they are -- then you're going to have a classic case of moral hazard, where the incentives are for perverse behavior, and you're going to incentivize the 75 percent of honorable people paying their mortgages to stop.

A lecture on morals from the bow-tie-wearing buffoon whose previous wife tossed all his belongings onto the lawn when she found out he was cheating on her with his now-wife! But seriously, this is a guy who sold whatever he had by way of intellectual consistency a long, long time ago. There is not a Republican policy he can't prop up with one rationale or another. He can get himself worked up into quite the moral froth over the corrupting influence of money in college sports, but remain strategically silent over the bankers who actually put us into this economic tailspin - and the Republicans who kept us in this mess.

What about that perverse behavior, George? It seems you only care about the behavior of the rabble. Funny, that.

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