Fear and finance make bad bed partners

MC O'Bryant

George W. Bush's incomparably successful formula of evoking fear and privilege as presidential leadership tools remains just as virile as seven years ago when they were first employed to goad our nation into a war of infamy against a nebulous enemy with no prospects for victory. The "Mushroom cloud," fear tactic he used to anesthetize the minds of logical thinking people in his Don Quixote hunt for weapons of mass destruction in Iraq has been rolled out once again to insure that the captains of greed and fools of non accountability on Wall Street are bailed out of their, "It can't wait," "The sky is falling," financial crises.

Yes, I know. It is no longer a bailout. It is a rescue plan. "What's that? Did I hear someone opining, something about, "Lipstick on a Pig?"

When fear replaces objectivity and self-assurance in arriving at solutions, its sadly ironic that the little guy is inevitably the one who winds up taking the trouncing. The White House spin machine keeps the, "Drums of fear," pounding in the hearts and minds of home owners and ordinary tax payers by reverberating the theme that they are the ones with the most to fear if the Bush/Paulson/Bernanke plan is not adopted as our way forward. The villain, they want us to believe, is the little guy, the sub prime borrower -- people living in homes which because of their low income they have no right to be in.

When Franklin D. Roosevelt reassured the nation, "We have nothing to fear, but fear its self," he was admonishing that fear is an unfounded emotion instilled in the minds of a faint-hearted few who remain unexplainably unaware of the almighty ability of our great nation to right itself, even when caught up in the most severe tribulation. I firmly believe, as did FDR -- invest in the common man, purvey hope, not fear and increase, not decrease home ownership.

I appreciate that an opulent life style for money brokers fed in recent years by sub prime mortgages has placed some undesirables, if not outright unworthy purchasers in homes they can no longer afford. Notwithstanding, the serendipitous circumstances that got them in the homes our government's objective should be to keep them there.

A homeowner with financial issues is one thing, a family forced into homelessness via foreclosure and repossession is all-together a different calamity with dire and often irreparable consequences.

Exceptions aside, all it takes to keep those who over purchased in their homes is money. That is easy to fix. The United States mint can create it, and, I'm not proposing some, "Pie in the sky," "Left wing," Section 8 give away. I'm thinking about the already in existence, federal mortgage institutions "stepping up to the plate" and taking equity positions in homes rather than forcing foreclosure and evictions.

The way out of the morass of financial hysteria that we are in is for federal officials modeling the old VA and FHA programs, to direct Freddie Max, Fannie Mae as well as all other federally backed lending institutions to directly start writing fair market value, 30 year mortgages collateralized by owner occupied properties. Currently, Freddie Mac and Fanny Mae only get involved in buying up mortgages written by local (often with nationwide offices) real estate loan brokers. These 30 year fixed mortgages could be written at an affordable five percent APR These same marauders of our capital are presently charging people in pursuit of the Great American Dream interest rates hovering in the seven percent range on homes and up to 28 percent or more for certain credit card billings.

It's a crises ending solution we can easily afford. The Federal Reserve is already supplying funds to qualifying institutions at two and one-quarter percent, which means they in turn would realize a 100 percent plus profit on their redistribution. Let's see. By eschewing the fear factor driven bailout, what would be the cost savings of not having to, "reinvent the wheel?" Oh Yeah. Seven hundred billion dollars. But, some reality minded existentialists are saying more like a trillion dollars -- whatever that is.

Norman Transcript contributor MC O'Bryant is a retired federal government employee, economics teacher and a freelance writer.