Saturday, April 05, 2008

The NY Times & “bankruptcy reform”

The NY Times’ reputation, bottom line and stock price have all tanked.

The Times has been unable to come up with any solutions to the tankings.

Letting hundreds of workers go doesn't seem to have helped much.

But never mind any of that.

The Times is confident it has solutions to other peoples problems.

Do know someone who took out a bigger mortgage than they could handle? Or a mortgage lender who made subprime (read high risk) mortgages to people with questionable credit histories and got a “performance bonus” for making those high risk mortgages?

How about a lending institution that made such loans under government pressure to lend in “traditionally under-served neighborhoods” to a more “diverse population?”

The Times has "solutions" for all of them. Excerpts from a Times editorial today:

…Congress is just now getting around to responding to the foreclosure crisis, doing things that would have been too modest even months ago, and are now clearly not up to the scale of the problem.

In the relief package debated by the Senate this week and expected to pass next week, lawmakers bowed to the mortgage industry. They ditched what would have been the bill’s most powerful measure — allowing bankrupt homeowners to have their mortgages modified under court protection.(emphasis added)

The remaining features in the package are smaller bore — $10 billion in tax-exempt bonds to help local housing agencies refinance subprime loans, $4 billion for local governments to buy foreclosed properties and $100 million to expand counseling for homeowners at risk. …

Congress has all the data it needs to quit dithering and take bold action.

Restoring the bankruptcy reform to the relief package as it moves through Congress would be a good place to start. …
George Will today tells us some of what’s wrong with the Times’ “solutions”, particularly "bankruptcy reform," which the Washington Post and many Senate Democrats also favor [excerpts]:
… [Sen. John McCain] says "it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers." For now, he is with Senate Republicans in opposing the Democrats' proposal to empower judges to rewrite the terms of some mortgages, an idea that strikes at the sanctity of contracts and hence at the ethic of promise-keeping that is fundamental to social life.

He opposes an additional dose of the toxin that has made the credit system sick -- he favors strengthening rather than weakening down-payment requirements for loans backed by the Federal Housing Administration.

And [McCain] has admirably avoided the rhetoric of victimology, such as that used when The Post editorialized that "lenders pushed tens of billions of dollars in potentially high-interest mortgage debt on people ill-equipped to handle it."

Pertinent questions were elided by The Post's formulation of the problem, a formulation in the spirit of the liberal narrative about "predatory" lenders.
How much pushing of lenders was required when they were being pushed by a bipartisan political consensus that, such are the community benefits from homeownership, it should be maximized?

What portion of the subprime borrowers currently in distress -- 30 percent? 50? 70? -- lunged for loans requiring 5 percent or less (if any) down payments and fibbed about their financial assets and capabilities? …
The Times editorial is here; Will’s column’s here.

I’m with McCain on these issues.

What the Times, WaPo and the Dems are proposing amounts to rewarding those who did things they shouldn’t have and making the rest of us meeting our mortgage obligations – still over 97% of mortgage holders – pick up the bill for those who don't.


Anonymous said...


You are right on.

Allow me to make an observation I seldom see in the MSM. It is said that up to 2 million home owners could lose their homes. If I read that correctly, it means that up to 2 million new people will become home owners.

That something to cheeer about.


Anonymous said...

John -

I am glad you picked up on the role the government played in this fiasco. To see more complete coverage, go to Rich Lowry's column, What Is Predatory Lending? at:

Jack in Silver Spring

JWM said...

To Ken,

Look for a reference to what you say about 2 mil new people in a post intended for N&O editors tomorrow.

You're saying a truth few people know or say.

To Jack,

I tried to follow your link with no luck.

When I found Lowry's article with the link below it had a copyright notice I'd never seen before.

I don't know what to make of it and don't want to say I'll follow up when work load may prevent me from doing that.

Thank you to you both,


For Lowry article: