Posted on Monday, June 28, 2010
Larry Kudlow and I agreed on CNBC yesterday that we’ve had enough
government intervention in the economic crisis to last a lifetime.
But as Shaien Nasiripour points out in "Fannie ferocious; taxpayer
owned mortgage giant attacking struggling homeowners," I was wrong.
Fannie’s move to push strategic defaulters is brilliant. This gang
of borrowers, as opposed to those who truly cannot afford to pay their
mortgage, are deliberately manipulating our already over burdened
legal and banking systems in a play to live for free (or in the case
of investors, pocket rent without paying their mortgage) for months,
even years. All at tremendous cost to the rest of America; more
foreclosures, lower home sales prices, blighted neighborhoods and other
financial losses which will eventually find their way into each of our
wallets. Not unlike price gaugers selling ice and bottled water for
the same price as fine wine after a hurricane, strategic defaulters
are taking advantage of a national crisis for personal gain.
In contrast, programs out of Washington, to date, have been all about
enticing behavior we want to see. Fannie’s move recognizes what we all
know from childhood - that some behaviors are more appropriately,
effectively and efficiently averted by threat of punishment. Maybe
safeguards against lawyers and other officers of the court
"counseling" would be strategic defaulters on how to wrongly
manipulate the law will be next.
The bottom line is that for the first time leaders seem to be more
accurately assessing the attitudes some modern day Americans have about
their home and associated social and financial obligations and legislating to fit.
Where strategic defaulters are concerned this is not your father’s