Subprime Intelligence

Hillary Clinton has called for measures to suspend foreclosures on subprime mortgages for 90 days, and the Secretary of the Treasury seems to agree that government must take steps to protect people who made foolish financial decisions. A good example is this woman, who could have been close to paying off an inexpensive mortgage but has refinanced her house repeatedly to draw a total of $500,000 from its inflated value—most recently to pay off the loan on her Lexus—and who has declined several reasonable offers from her bank to restructure her loan.

Talk about moral hazard! These people, and the inflated real estate markets they have made possible, need to face market discipline, or we’ll get more such irresponsibility. Do we really want to reward such foolishness, meanwhile turning people like me, who believe in living debt free, into chumps?

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