Bailout Bill Dies in the House

avatarthumbnail.jpgThe bailout bill died this morning in the House of Representatives. Rep. Barney Frank is blaming the Republicans for not supporting the measure though a lack of support could be found on both sides of the aisle.

Here’s the question to which I’d like an answer – and the answers I see seem to vary widely depending on who happens to be speaking.

Is this measure absolutely necessary? As the banking industry contracts to where there are a handful of large-scale national banks as well as some regional banks – banks that have not been impacted by the mortgage market because they didn’t get into the risky propositions their larger brethren such as WaMu and Wachovia and others did … is this a bad scenario? Isn’t this a sign of the free market correcting itself to some degree?

It’s nice that the federal government feels the need to jump in after years without any sense of regulation. It was nice hearing the presidential candidates talking about how long ago they first sensed the problem … TWO YEARS after the problem actually started.

The argument is the free market (a bit of a misnomer since there’s some regulation in place so free isn’t really totally free) can’t correct this mistake.

Maybe that’s the case. But do you trust the federal government, the same government that stood by as all this happened, to now be the savior with our tax dollars?

[tags]Phoenix real estate, bailout bill[/tags]

About Jonathan

Jonathan Dalton is a 30-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

  • Heard on the radio that one third of Americans believe we’re in a DEpression. Consumer confidence is really poor. Wouldn’t this bailout help that perception? Or do you believe it should correct on its own?

  • In a word, NO. I don’t trust the federal government to fix ANY major problem. I’m still waiting for someone to give me one example of a correctly-run government entity.

  • Vicki – the question in my mind is whether the bill was going to do something substantive or whether the intent was just to give the appearance of doing something. Listening to the talking heads today, I still don’t have a clear answer.

    Ryan – I’m more or less of the same mind. Though it’s not a purely free market, corrections are necessary. Unless there really is a collapse coming, I think we’re better off letting the market sort through the mess.

  • Jonathan, I’ll chime in with my belief that markets do self correct and that we are seeing that right now.

    Banks such as Wachovia and WAMU made bad bets and they are now history. JPMorgan, Wells and BofA are strong and gettting stronger.

    And on a personal note, have a happy, healthy and prosperous New Year!

  • I don’t think anyone believes this would fix the problem but I thought it would boost consumer confidence which is a big piece of this mess. No??

    Do you believe that working itself out would be a longer or shorter process than the bailout? Or it doesn’t matter because it’s a better solution in the long run?

  • Scott

    It is a little painful…but let the markets flush themselves out. That is the tough love of capitalism.

    $700bln would have eased the pain in the short term, but the underlying problems wouldn’t have gone away. Too many bad loans. People in homes they can’t afford. An oversupply of homes on the market. Too much new construction.

    At this point, it is more about political theatrics than anything else. In a month, they would be after another $700bln and then what…

    As soon as you create a backstop for bad behavior, you’ll get more bad behavior. Fannie and Freddie are excellent examples of what not to do and in essence this $700bln would have been doing more of what they were doing – buying bad loans and hoping to profit on the taxpayers dime.