Why interest rates aren’t falling…

The financial bailout bill has taken a back burner to the election.  Removal from the spotlight should not divert the attention of the American People.  I’ve seen several articles about why mortgage rates aren’t falling as the Fed lowers theirs and though they wonder they don’t address the answer.

 Sen. Biden, in speaking about the financial crisis, said that bankruptcy court judges should have the ability to lower principle and interest on mortgages. 

Ding Ding Ding, doesn’t that set off alarm bells to you?  Apparently it did not to the press, or the Republicans, or the Fed Chairman, or Fannie and Freddie chairmen past or present.

A mortgage is a private contract.  It lays out the details whereby you receive money in a lump sum in exchange for a promise to pay it back with interest.  If you weren’t going to be paying interest, do you think anyone would loan you money?

If courts had this power, then any mortgage could be written down without the input of creditors.  How could we expect anyone to make a mortgage loan with anything other than punitive interest considering how big the risk just became?

The only ones foolish enough to make loans under those circumstances would be the Federal Government under Democrat leadership. 

This is a dangerous game of chicken, with the American People, their property rights and the free market in the middle.

This entry was posted on November 8, 2008 at 23:18 and is filed under Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.