US lawmakers pass housing rescue

Good, Bad, Ugly?

Oh cool. Taxpayers get to bail out the irresponsible people who took out mortgage that should never have been given loans. Whoopie for all of us.

Ugly according to Dr. Sowell...

Woah! That was fast. Less than 2 minutes and an updated story is up:

Housing rescue = passing the bill from from spendthrift debtors to people who work hard and save their money.

WOO-HOO!

I feel like I'm living in the western Roman Empire, sometime around 400 A.D. I now wonder whether what's in place is worth saving, or the collapse should be hastened in the hopes of getting something better.

And the Sowell piece that evenflow posted is right on the money.

The Feedback Loop Of Government Intervention

1. Government sees a "need"
2. Government pumps in free money to address the need
3. The new money, because it is free, creates additional demand for money
4. The increase in demand for money manifests itself as an increase in the aforementioned "need."
5. Go to 1.

Repeat steps 1-5 throughout the economy, until the government runs out of money.

Hmmm...

The only good that can come of this is confidence. If it translates into an actual bail out, then we're talking New Deal on steroids, only instead of being there to protect regular joes, it is there to protect investors. I'm surprised nobody had pointed this out yet. Yes, reckless borrowing is a problem, but who wins the most here? Fannie and Freddie shareholders.

I wonder if there's a single provision in this bailout that's Constitutional.

Probably not.

I yearn for the day that I see the headline, "US lawmakers pass painful kidney stones".

"Commerce Clause"



I just KILL me!

I'm curious to hear your thinking on this. I don't much like this sort of thing, but on what do you base the Constitutionality question? Article One, Section 8 is pretty broad regarding legislative powers. I'd think this comes under the right to regulate commerce.

"Regulate" would have to be twisted into some sick definition that didn't exist at the time to mean "bail out" or "subsidize", IMHO.

The power (not the right) to regulate commerce is (relevantly) "among the several states". "Among" means "between" but in the context of more than two. It does not mean "within." Mortgage lending is strictly an intrastate activity. The 10th amendment takes care of any uncertainties there, were it not routinely ignored.

Actually, it is broader than that, both explicitly (see the text if you don't believe me) and more importantly given the court's respect for precedent, by judicial interpretation.

"To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;"

Nope, I'm not seeing it.

Little we can do about the courts, I'm afraid.

Well I was mostly pointing out that it isn't just states (ie the part you didn't bold). However, the term "among the states" is taken to mean commerce happening in more than one state, not commerce happening between two states. And that, pretty much means most things. That's why the clause is used to justify so many court rulings.

Well just because it's taken that way doesn't mean that's the correct way to take it.

IYO. How else could it be taken? States don't engage in commercial transactions with one another.

Sure they do. Water rights, for instance, and throughways, before the Fedgov took over most highway construction.

I think the point is that "interstate commerce" means that the business is happening between parties in separate states.

If I, living in Arizona, buy a mortgage from an Arizona company, then that is NOT "interstate commence" and therefore should not be fit to be regulated by the FedGov. It would strictly be the purview of the State.

As per my rep above, I hereby retract my previous post.

What CD said, except for the Arizona part.

There you go, Chaos, you've answered the question as to why the commerce clause applies to Fannie and Fredie.

Why is Fannie or Freddie Constitutional?

Are you suggesting that a private corporation engaging in a legal form of commerce is unconstitutional?

Fannie wasn't private to begin with, and at any rate calling a GSE "private" is a stretch Reed Richards couldn't make.

Fannie is indeed a special case. It was initially a government agency, but the point is that at the moment, it is a privately held corporation. The problem mostly, is that people believe it to be government sponsored (and therefore guaranteed). Seems they were right.