A careful examination of Treasury Secretary Henry Paulson’s recent remarks to Congress about proposals to stem the current epidemic of mortgage foreclosures illustrates the dark side of conservative ideology concerning ‘personal responsibility’ in the marketplace. On one hand, Secretary Paulson advocates against Congress taking action to shore up lower class homeowners struggling under the weight of adjustable rate mortgage payments they cannot afford when the mortgage rate re-adjusts. One the other hand, Paulson vehemently oppose regulations against the mortgage lenders to prohibit the very practices that created this housing fiasco in the first place. What are we to conclude then, but that conservative economic policy is to encourage the creation of an economic trap and then severely punish those who are ensnared in it?
From 2004 through 2006, the President touted what he called the drive towards an “ownership society”, creating an illusion that the American Dream was within the reach of any American willing to sign on the dotted line – and for a brief time, it was. Millions of people with no down payments were approved for mortgages with no reference to their ability to repay the debt they were assuming. In a vast number of other cases, borrowers were approved for adjustable rate loans they could afford when they borrowed the money, but were obviously not going to be able to afford when the loan rate re-adjusted. In both situations, massive foreclosures were more than foreseeable; they were assured to occur.
Now, at the day of reckoning, the very government that encouraged and facilitated this economic meltdown seeks to evade assuming its own ‘personal responsibility’. If that’s compassionate economic conservatism, I want no part of it!
