Trusted local news leader for Prescott area communities since 1882
Mon, July 22

Editorial: Bailout plan sad state of affairs

By a 263-171 vote, the U.S. House of Representatives Friday sent to President George W. Bush's desk a $700 billion bailout of the nation's financial system that is supposed to solve the immediate problem.

The measure previously cleared the U.S. Senate on Wednesday night by a 74-25 vote.

They tell you no one should see how they make sausage, and watching Congress make laws is equally disgusting. Congress got us into this mess starting back with the Clinton Administration by relaxing loan requirements too much to promote low-income home ownership.

The long-term effect has been to grant mortgages to millions of people who are unable to pay them back. Fannie Mae and Freddie Mac then created securities based on the bad loans.

Even though many people warned Congress about this situation, Barney Frank, chairman of the House Financial Services Committee, and other Democrats dismissed critics as "Chicken Littles."

That blithe ignorance of the situation, plus lackluster regulation and oversight by the executive branch, allowed many unscrupulous, careless lenders to bring the nation to crisis. Banks currently are unable to lend to each other, let alone to would-be car-buyers, home-buyers, students who need help with college, and businesses that need operating loans.

We don't know yet if Friday's vote will solve the problem. The theory is the $700 billion bailout will free up money for banks to lend. The government will buy up the homes and other assets underlying the bad loans and someday it will be able to sell them at market value to recoup the taxpayers' money.

It's a particularly sad comment on the state of Congress that both houses had to include nearly $100 billion worth of pork and tax breaks to induce enough votes for it to win approval.

Luckily, enough constituents who have every right to be angry about this came to realize that the prospect of economic collapse was far worse than some CEOs beating the prison time they deserve.

Some members of Congress still may lose their seats in November and deserve to.

That pales in comparison to the number of people who have lost jobs, homes and life savings, because of their government's many failures in letting this happen.

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