"Who are you working for?" It's a simple question that carries a lot of meaning depending on who's asking and when. It's the question millions of Americans - struggling with enormous mortgage payments, gas nearing $4 a gallon and unappetizing higher prices at the grocery store -- must have wanted to ask the Bush administration when they heard that the federal government had bailed out one of Wall Street's main investment banks.
Clearly, assisting Bear Stearns was necessary to stave off further economic collapse, but the message it sent was unsettling. The federal government, at the direction of the Bush administration, will pull out all the stops, spare no expense, and burn the midnight oil to bail out Wall Street, but that same administration has put in only a fraction of the effort over the past year to help homeowners on Main Street.
The effort to rescue Bear Stearns was nothing short of extraordinary. It featured top Treasury officials, the Federal Reserve, experts, and lawyers, working around the clock, racing against the ticking time bomb of a failing investment bank that threatened to further sink the economy. War rooms were established, conference calls held, plans of action drawn up and decisions executed -- all in a matter of days.
Yes, when it was clear that a major investment bank on Wall Street was in trouble, the Bush administration rushed to the scene like firefighters responding to a five-alarm blaze. But a full year into the subprime mortgage crisis, they have done nothing but hit the snooze button on the alarm as 20,000 Americans watch their dreams of homeownership go up in smoke every week. For families facing foreclosure, the housing crisis doesn't mean red ink on a balance sheet, but a padlock on their door.
Some have argued that when families can't keep up with out-of-control mortgage payments, they are at fault and should be left to fend for themselves on the streets. These are many of the same people, incidentally, who have no problem with the idea of bailing out irresponsible Iraqi politicians with $120 billion dollars of taxpayer money per year for the next hundred years, but don't think the government should step in to prevent widespread homelessness here in America.
That argument blaming homebuyers for their irresponsibility is as exaggerated as it is heartless. It ignores the irresponsible brokers in the subprime market who did everything they could to make a buck -- including selling mortgages to homebuyers who could not make the payments.
Furthermore, foreclosure is in no one's interest. Lenders say they lose tens of thousands of dollars on each foreclosure. Families see the American Dream turn into the American Nightmare. Their neighbors see the values of their own homes decrease. And if recent job losses, weak earnings reports and stock market swings are any indicator, foreclosures have shockwaves that reverberate throughout the entire economy.
Americans deserve far stronger efforts from their public officials to end a crisis that affects us all.
For a while now, Democrats in Congress have been trying to offer a ray of hope to struggling homeowners with a plan that would give those facing foreclosure more options and assistance in refinancing bad loans. We don't have a magic wand to wave and immediately make the economy whole again, but we do have a series of helpful measures, including a bill being considered in the Senate today, that can extend a hand to homeowners where now there is none.
For weeks, our Senate Republican colleagues, adhering to the president's directive, have blocked this particular proposal from consideration -- even as more and more Americans fall further and further into debt and their homes slip away. Yesterday, however, the ray of hope that this measure represents shined a little brighter upon the announcement that a bipartisan deal is in the works. We should all hope that the product of these negotiations is not too watered-down to be effective -- in situations like this, Americans deserve bold action, not more empty promises.
Even if we are successful in our efforts to attack the symptoms of the housing crisis, much more work will be needed to address the root causes. It will require a sustained effort to get our regulatory mechanisms to catch up to the intricacies of modern finance. Make no mistake, our efforts are way behind the times.
It's going to take aggressive, sustained action to bring our oversight up to speed and to stop the tsunami of home foreclosures that is ravaging our communities. And to start, it's going to take a government that cares just as much about the well-being of the occupants of a row house in Newark or Camden as it does about the occupants of a billion-dollar skyscraper in Manhattan.