The Stealth Bailouts By MIKE WHITNEY

[Crewleader]

March 5 - 7, 2010 weekend edition

The Problem is Political, Not Economic

The Stealth Bailouts

By MIKE WHITNEY

There's finally some good news on the housing front, but it has nothing to do with sales, inventory or interest rates. In fact, it has nothing to do with market conditions at all. It's a story about politics and how government can work when elected representatives do their jobs. The details are laid out in an article by Dean Baker. Here's an excerpt:

"As the Obama Administration works up its 12,487th plan for keeping underwater homeowners in their homes, Arizona’s legislation may have the courage and good sense to do the obvious: let foreclosed homeowners stay in their home as renters. A bill was just introduced in legislature that would allow homeowners in houses that sell for less than the median price to remain in their home as renters for at least one year following foreclosure.

With this simple gesture the Arizona legislature could do more for the nation’s underwater homeowners than all the brilliant DC policy wonks have managed to accomplish in the last three years with all their billions of dollars. The legislation would give low and moderate-income homeowners security in their homes. It doesn’t make them jump through hoops and prove to bureaucrats that they were worthy. It doesn’t require them genuflect before loans servicers or bankers.

This legislation would give homeowners the right to stay in their home. And bingo, every low and moderate-income homeowner in the state would know that the bank could not just throw him or her out on the street. If this passes the banks may also think more seriously about loan modifications, since they couldn’t just throw a foreclosed homeowner out on the street. The proposal doesn’t cost the taxpayers any money. It also doesn’t require any government bureaucracy. It’s easy to see why it’s a non-starter in Washington." ("Arizona Leads the Way in Combating Foreclosure" Dean Baker, Truthout)

http://www.counterpunch.org/whitney03052010.html