Humanitarian and United States Senator Norm Coleman weighed in with a proposal to help people facing foreclosure on subprime mortgages hold onto their homes last week. He suggested letting then borrow money from their retirement accounts without penalty, provided they pay it back within two years.
"Homeowners should be given the power to decide whether it makes financial sense to turn to their retirement savings to keep their homes," he explained in an October 29th op-ed piece in the Minneapolis Star Tribune. "This option would give hope to those who are facing foreclosure and would not penalize them for trying to keep their homes and remain in their communities..."
It's a nice thing to give hope to those who are facing foreclosure. It's also nice not to penalize them for trying to keep their homes and remain in their communities.
Not as nice, however, is Senator Coleman's Republican myopia, as evidenced in the assumption that those facing disclosure on subprime mortgages have retirement accounts they can turn to.
He doesn't understand that setting aside money for retirement takes a combination of wealth and foresight that would tend to keep a home buyer from stumbling into the subprime mortgage trap in the first place. He is unaware that for many Americans - probably most subprime borrowers - the equity in their home is their primary retirement account.
His assumption that homeowners who actually have retirement accounts to draw from would be able to pay the money back in time to avoid penalties seems a bit short-sighted too. Working class wages are stagnant. Any raise in pay is more than offset by rising prices for gasoline and food. Corporate America is passing a larger percentage of the cost for benefits like health care on to workers (if corporate America provides health care benefits at all).
To someone facing foreclosure on a subprime mortgage, (with or without retirement savings), Senator Coleman's proposal must feel like the half-assed attempt at a fix that it is. But to investors who bought up these mortgages by the bundle - investors with billions of dollars about to go up in smoke - it probably feels like the epitome of common sense and compassion.
It gives them - the investors - hope. It gives them one more card to play before they have to write the whole miserable low life, blue collar fiasco off.
"You got a retirement account," you can hear them telling homeowners, sounding like a street corner loan shark making a collection. "Go get the money to pay me from there."
Senator Coleman's plan would make some investors whole for the time being, and kick the can down the road a couple of years. By that time, the congress and the executive branch corporate America will buy and pay for in 2008 will be able to come up with some way to have America's individual taxpayers (not corporations - God, not corporations) bail everyone out.
Either that or a way to add it all up, borrow more money somewhere, pay investors, and pass the debt on to Generation Screwed - and future Generations Screwed - like they're doing with the war in Iraq.
Whenever he wants to sound sincere, Senator Coleman lapses into a certain tone of voice. It's a bit lower, and more cajoling. There's a little more, "Hey, c'mon this makes sense. " And, "Hey, it's me - you're old buddy Norm."
Expect to hear that tone as he buffs this turd of an idea to a high shine. When you hear it, ask yourself whose buddy Norm really is.