Mortgages: Are we our brothers’ keepers?

last updated 8 January 2015

If populist resentment had a name, it would be Rick Santelli, said Tracy Connor in the New York Daily News. Last week, from the floor of the Chicago Mercantile Exchange, the CNBC business news reporter publicly denounced President Obama’s $75 billion mortgage refinancing initiative. Calling the defaulters “losers,” Santelli said that Washington was “promoting bad behavior” by forcing those who had paid in a timely manner to help subsidize their burden. “How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” Santelli asked traders, who booed lustily. Santelli’s remarks quickly became CNBC.com’s most popular video clip ever, viewed nearly 1.7 million times. They also served as a lightning rod for the frustrations of responsible homeowners around the country. “The American people have a sense of entitlement that the government has to bail us out for making stupid mistakes,” complained Michael Spada of Kingston, N.Y. “I’m so sick and tired of these people.”

As well you should be, said Lawrence Kudlow in The Washington Times. About 92 percent of mortgage holders have paid their bills on time, and for living within their means they get nothing, while “irresponsible defaulters” get yet another taxpayer-funded government handout. Besides, no bailout is necessary. The free market is already solving the housing mess, as home prices drop and new, first-time home buyers rush to take advantage of the bargains. So let’s stop trying to prop up $500,000 mortgages taken out by fools earning $40,000 a year. “If we penalize the good guys and subsidize the bad ones, we are undermining the moral and economic fabric of our country.”

You’ve got the wrong bad guys, said Cynthia Tucker in The Atlanta Journal-Constitution. Banks and mortgage companies pushed loans with unreasonable terms on working-class people, even when they could have qualified for more reasonable mortgages. It was the banks’ greed—and Wall Street’s—that fueled this mess. And now, out of pure, selfish interest, we have to throw a life preserver to these floundering homeowners, said David Brooks in The New York Times, for the same reason we had to bail out the banks. The economy will not recover for years if millions of additional homeowners default and more banks collapse under the weight of bad debt. “At some level, we’re all in this together,” which unfortunately means showering money on lots of “greedy idiots.”