This is Why People Hate Government

As most of you know, one of the major projects I have been working on is an effort to prevent passage of a mortgage bill that would take taxpayer dollars and use them to bail out the small percentage of borrowers who obtained risky sub-prime loans and are now facing foreclosure. The sub-prime mortgage crisis is affecting roughly 2% of the population while 98% of the population remains unaffected because they either have paid off their mortgages, have a loan that they can handle, or rent. Initially, we fought this bill on moral and economic grounds arguing that not only is it unfair to punish responsible individuals in order to help out the minority of the population who made a poor financial decision, but also that it would encourage lenders to develop more risky "novelty" loan schemes. Additionally, regulation of the crisis would further exacerbate the problem and could possibly extend the downturn in the housing market. This is based on the basic principle that the market works best when it is simply allowed to run its course with minimal regulation.

I chose to title this piece "This is Why People Hate Government" because of a new development that has now made the debate over the mortgage bailout a question of ethics. Friday afternoon, it was revealed that Senator Chris Dodd (D-CT), the chairman of the Senate Banking Committee and one of the primary architects of the bailout bill, had received a "VIP" rate on his own mortgage from Countrywide Financial. Countrywide was one of the leading sub-prime mortgage lenders, and stands to benefit substantially if the Dodd mortgage bailout bill passes the Senate. The question is no longer whether or the mortgage bailout is good economic policy (it's not), but whether Sen. Dodd is abusing his power in order to give kickbacks to friends who gave him "VIP" treatment when he refinanced his Washington town home with a $506,000 loan and his Connecticut home with a $275,042 loan. The special treatment came in the form of the waiving of certain fees that every other loan seeker must pay as well as lower interest rates.

Although Sen. Dodd claimed that he never sought preferential treatment from Countrywide, surely the Chairman of the Senate Banking Committee would know, better than most, that his mortgage was not what would be considered "typical."

The Dodd Countrywide mortgage bailout bill should be coming up for a vote this week. Call your Senators and ask them if they also received preferential treatment from Countrywide and then ask how they are planning on voting. The great thing about American democracy is that even though our leaders may be corrupt, we have the ability to hold their feet to the fire for abusing their power and our trust.