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A Looney Housing Rescue Bill

If I've read the articles right, the $29 billion housing rescue deal agreed to by the leaders of the Senate is a waste of taxpayer dollars.

It looks like the Senate has decided the way to attack the housing problem is to reward some reliable campaign contributors--i.e. homebuilders. How else to explain that the bulk of the legislative package goes toward a new tax break for home builders. It allows homebuilders to claim current losses against taxes paid in prior (and more profitable) years. In essnce, they're getting a hefty tax rebate.

Go figure.

Worse yet, the Senate dropped the one proposal that could have made a difference: Allowing bankruptcy judges to modify the terms of residential mortgages in personal bankrupty.Bankruptcy is a well-established safety net. It has many experienced judges and trustees. The move would go a logn way toward solving the housing foreclosure crisis. But the financial services industry opposed it--and the Senate listened. Question is, how does the financial services industry manage to wield political power after all the damage they've done to the economy and households?

About the author

Chris Farrell is the economics editor of Marketplace Money.
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I volunteer for a consumer org that arose about 15 yrs ago from homeowners sick and tired of shoddy construction. In recent years predatory/fraudulent mortgage lending has been a growing element of builder complaints and inquiries submitted to our org. We've written countless letters to politicians and the media, submitted commentary to govt sites, etc, warning years ago that this was a growing problem that would only get worse if laws were not enforced and bad builders held accountable. Other org's like the Center for Responsible Lending, etc, did too. We were largely ignored with the exception of a few media reports that were quickly forgotten by the public and never paid attention to by the govt or law enforcement apparently. Most of the real news about these issues remains online, not in mainstream TV and newspaper stories where the majority of Americans even see it.

You are right about campaign contributions. Consumer org's often operate on next to nothing, and we can never match the millons the industry spends annually on contributions and professional lobbying and public relations (spin). It's too bad the facts and the truth don't count for as much as money. Every time I've gone to my state capitol I've taken documentation to back up what I say. I was an invited member of a task force during one legislative session. The builders lobbyists brought a brochure on heart disease and tried to distract attention from the topic by saying there were bigger things to worry about. Well now I guess the U.S. economy is a pretty big thing to worry about isn't it?

These industry insiders created the toxic loans, etc. Now they paint themselves as the victim and get a bailout? That's obscene.

I would have loved to see judges be able adjust terms... and I too agree the bailout plan is just a waste for the taxpayers and even worse yet, doesn't really help a troubled homeowner.

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