Friday, August 31, 2007

Bush's Bankruptcy Actions Revisited

Now that America faces a crisis from people unable to afford their subprime mortgages, a quick look back is instructive. When the House of Representatives passed the Bankruptcy Bill the spring of 2005, President George W. Bush issued this statement:

I commend the House for acting in bipartisan fashion to curb abuses of the bankruptcy system. These commonsense reforms will make the system stronger and better so that more Americans - especially lower-income Americans - have greater access to credit.

A week later he signed the bill adding "By making the system fairer for creditors and debtors, we will ensure that more Americans can get access to affordable credit."

The problem came in the kind of "fair" credit the law allowed, rising variable interest rates with huge prepayment fees, usually hidden from the borrower. Fed Chief Ben Bernanke spoke to these problems the other day. Today he assured the public the Fed is in control.

President Bush just addressed the country from the Rose Garden on home ownership financing. I tried to listen to the webcast prominently displayed under the "Latest News", but the White House server couldn't find the file. I'll try again later to find out why so many citizens on are hopping mad at George over those mortgage bailouts. They think he's trying to help deadbeats who overspent on housing. My guess is he's trying to help mortgage backed security holders recoup some of their losses. But either way, some 80,000 people could get help through FHA refinancing.