George Will

Clinton says the rate freeze should last "until the mortgages have been converted into affordable, fixed-rate loans." What does "affordable" mean? Paulson says: "Homes in foreclosure can pose costs for whole neighborhoods, as crime goes up and property values decline. Avoiding preventable foreclosures, then, is in the interest of all homeowners." But all foreclosures are "preventable" if all mortgage contracts can be revised. Regarding "predatory lending," remember that Congress often operates on the principle "first criminalize, then define." But did "predatory" lenders expect the borrowers upon whom they supposedly preyed to default?

Speaking ill of lenders began when homo sapiens acquired language, hence it is unsurprising that many people who until recently were criticizing lenders for not making money available to marginally qualified borrowers are now caustic about lenders who complied. Clinton is fluent in the language of liberalism, aka Victimspeak, so, denouncing "Wall Street," she says families were "lured into risky mortgages" and "led into bad situations" by those who knew better. So, lenders knew their loans would not be fully repaid?

Jesse Jackson speaks of "victims of aggressive mortgage brokers." But given that foreclosure is usually a net loss for all parties to the transaction, what explains the "aggression"? Who thought it was in their interest to do the luring and leading that Clinton alleges? While granting that "borrowers share responsibility," her only examples are those "who paid extra fees to avoid documenting their income" and "speculators who were busy buying two, three, four houses to sell for a quick buck." Everyone else has been victimized.

Paulson has been criticized for saying that some subprime borrowers "will become renters again." But some borrowers put no money down on their houses, or took mortgages with negligible "teaser" rates, or mortgages requiring them at first to pay only interest, not principal. Such borrowers are effectively renters.

The president says: "The homeowners deserve our help." But why "deserve"? The principles of "compassionate conservatism" are opaque, but they might involve liberalism's premise that Americans are so easily victimized they must be regarded as wards of government.

Perhaps Washington's intervention in the subprime problem reveals the tiny tip of an enormous new entitlement: People who voluntarily run a risk, betting that they will escape unscathed, are entitled to government-organized amelioration when they lose their bets. The costs of this entitlement will include new ambiguities in the concepts of contracts and private property.


George Will

George F. Will is a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide.
 
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