Treat homeowners like Donald Trump
When Donald Trump almost went bankrupt in the '90s, creditors made him give up his credit cards before he got help. Commentator Todd Buchholz says homeowners who face foreclosure have to give up some things too.
Commentator Todd Buchholz (Colorado College)
More on The Economy, Housing - Real Estate, Fed. Budget/Govt. Spending, America's Financial Crisis
TEXT OF COMMENTARY
Kai Ryssdal: Commentator and writer Todd Buchholz has been listening to the debate over help for homeowners -- whether or not taxpayer money ought to be spent to save mortgage holders who're in over their heads. He says, nuh uh.
Todd Buchholz: Get this: I think we should treat struggling, delinquent homeowners like Donald Trump. No, not the Donald Trump of 2004, who saved NBC, fired people for fun and wore his hair like crop circles. I'm talking Donald Trump of 1990. He'd bought up too many casinos, built too many condos and tumbled towards bankruptcy. To save him and his many houses, bankers snipped up his credit cards. Gone were dinners at Lutece. At one lunch break, Trump sauntered to a phone and dialed up the local McDonald's from memory.
Which reminds me -- what exactly do we expect of delinquent home dwellers who are looking for the government to bail them out? Shouldn't they have to cancel their HBO? Shouldn't they at least prove that they care more about their homes than about their Home Box Office? And how many of those dwellers actually put any money down to begin with? Remember stated income, false income, false hope?
The Federal Housing Finance Agency should aid only those who actually put down real cash and had skin in the game. Why? Because the government's program might encourage more delinquencies. If your neighbor gets bailed out because he's behind three months, why should you skip Starbucks in order to keep up with your mortgage?
Now, before you think I'm Mr. Potter from "It's a Wonderful Life," let me make one thing clear. The government should help. Congress should give bigger tax credits for new homebuyers. And Congress should cut the Social Security payroll tax to help the decaying job market. But, no matter how many magic wands Ben Bernanke and Hank Paulson flail, you cannot have people earning $80,000 buying homes that cost $1 million. Not unless they have a rich uncle. And guess what, that rich Uncle Sam, ain't so rich anymore.
Ryssdal: Todd Buchholz is a writer and former White House economic adviser to the first President Bush. His latest book is "New Ideas From Dead CEOs."
Comments
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From lenox, MA, 11/18/2008
Mr. B sounds like one of those neo-cons
who ignores reality in the name of the sound bite. This isnt about bailing out million dollar home owners who put nothing down because if someone has no skin in the game and they are sitting with negative equity they are gonna walk as soon as they get foreclosed upon, if they havent already. There is no incentive for them to stay in an overvalued home.
Its a specious argument. The only people who are gonna want to get bailed out are first time home owners for whom the american dream is to stay in their home and people who put down equity and are hoping to stay in their houses long enough to recoup their equity.
the more relevant questions is why are we investing in financial institutions foolish enough to make poor quality loans, assuming that they wont do it again? The money is far better spent keeping working and middle income people in their homes even if its necessary to forgive part of the mortgage debt or subsidize some of the mortgage payments. It seems like we quibble over $10,000 to keep someone in their house but say nothing of $150 billion to keep AIG and their creditors in business. Perhaps had we as a country acted earlier to stem the tide of foreclosure we wouldnt be in the economic mess we are in now.
From Atlanta, GA, 11/18/2008
Well, Buchholz was entertaining, if not terribly germaine, until his last little rant-let. My ears perked up when he mentioned relaxing the Social Security tax on employees. Is he serious?
The Social Security system has been teetering on the brink of insolvency for years and still faces massive hurdles if it is to pay for the baby boomers and this chucklehead is suggesting reducing the program's incomes?
That's when I remembered that I was listening not to an adviser, but a court jester.
From Orono, ME, 11/18/2008
FINALLY! a voice of reason in all the whining and hand-wringing - if you cannot afford it DON'T BUY IT! DUH.
-And I very much resent that MY TAX $$ are being used to bail out people who over-spent, or more egregiously (and in so many cases) re-financed to buy fancy cars and support extravagant lifestyles.
From Cleveland, OH, 11/18/2008
I am outraged. Todd Buchholz editorial was lopsided and unfair to the many homeowners with whom I deal every day. I am the Statewide Foreclosure Prevention Coordinator for ESOP, a non-profit based in Cleveland but working with homeowners throughout the state. For Mr. Buchholz to voice that homeowners should give up Starbucks and HBO shows that he is ignorant of the true foreclosure issues.
Every single day I speak with homeowners in danger of losing their home because of a medical emergency, temporary layoff or plant closing. These hardworking people have removed every optional expenditure from their budget and most are struggling to put a balanced diet before their children on the supper table. Gone are basic cable, steak even rental DVDs.
I invite Mr. Buchholz to visit our office during our intake sessions to hear the real story behind foreclosures.
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