Even Members of Congress illustrate the real housing problem
May 22nd, 2008 by Intern1Earlier last week Representative Barney Frank made the following statement in an interview with the New York Times, addressing the housing bailout he’s been pressing aggressively through Congress:
“The notion that this bill doesn’t keep people out of foreclosure is true,” he said. “It doesn’t combat global warming. It doesn’t get troops out of Iraq. It won’t help me lose weight. There are a lot of things this bill won’t do that I very much want to do. None of them are a reason to vote against a bill that doesn’t do what it doesn’t say it’s going to do but does what it does. What it does is go to the aid of cities that have been victimized.”
While his rhetoric seemed to sell many in Washington, one question that didn’t seem to come up was one that asks who exactly has been victimizing these cities, which Frank now claims are in need of desperate aid?
If Barney Frank was truly looking for an answer as to what the root of the problem is, he wouldn’t have had to look far. He wouldn’t have had to commission a study or even look outside of Washington. In fact, an exemplary example of the real problem facing the housing market today is located on the same floor as Representative Frank.
Only a few doors down the hall from Representative Frank’s office (2252 Rayburn), you will 2233 Rayburn, an office that currently houses an irresponsible homeowner who has contributed to the problem we’re facing today.
No, it’s not some Members underpaid Legislative Aide or even a Chief of Staff. The irresponsible homeowner currently occupying 2233 Rayburn is newly elected Californian Laura Richardson.
According to a California political website, Capitol Weekly, Congresswoman Richardson neglected to pay the mortgage she had taken out on a second home, while running her campaign in Long Beach:
While being elevated to Congress in a 2007 special election, Richardson apparently stopped making payments on her new Sacramento home, and eventually walked away from it, leaving nearly $600,000 in unpaid loans and fees.
In a response to the Capitol Weekly article, Congresswoman Richardson made the following statement:
Within a 12-month period last year (2007-2008), I was a member of Long Beach City Council, the District Director for California Lt. Gov. Cruz Bustamante, a member of the California State Legislature, and, now a member of Congress. While the transitioning has impacted me personally, the residential property in Sacramento California is not in foreclosure and has NOT been seized by the bank.
While her accomplishments over the last twelve months are impressive, there is no indication in her statement that her defaulting on this loan was caused by financial hardship. How could she claim that? She makes $165,000 a year.
The real problem isn’t that people aren’t making enough money; it’s that they’re making irresponsible decisions when it comes to their finances and handling them like adults.
To some Americans, when you take out a loan, they’ll make sure it gets paid, on time, understanding the consequences. If you’re too busy (say, running for Congress?), you set up direct deposit so the payment is withdrawn automatically, knowing you’ll have enough money to cover your debt for that month in your bank account.
However, there is another segment of the population, which includes people like Congresswoman Richardson, that seem to believe that loan repayments on second homes aren’t obligatory and you can just let them slide from month to month, ignoring the possible consequences.
It should be no surprise that many of the people who helped create the housing problems we’re seeing today aren’t single home owners. No, many of the problem borrowers are people who own second homes and some are even real-estate investors, who buy these properties hoping to make a quick buck on the resale.
Unfortunately, it seems that it’s also these people who could very well reap the benefits of this ridiculous bailout package that is funded by responsible homeowners and taxpayers like you and I.
While Congresswoman Richardson wasn’t in Washington to vote on the bailout package, she was nowhere near a House floor microphone during debate sharing her story and personal ties to this very expansive blunder in Congressional politics.
Bailouts aren’t going to change mentalities, as many of these borrowers already knew the risks before they found themselves in trouble. The only thing that will really fix this problem is letting the market handle the current “crisis” and let irresponsible borrowers and lenders learn a lesson, showing them what NOT to do in the future.
May 22nd, 2008 at 9:54 am
I’m sure there are other members of Congress contributing to the problem as well. I’d be interested in seeing how many of the members that voted for the Bear Stearns bailout were invested in Bear Stearns or JP Morgan.
What is really interesting is that even though it was reported that her home was auctioned in the CW article, she still claims that her home wasn’t in foreclosure. Am I the only one who is going to jump to the conclusion of Congressional special treatment here?
May 22nd, 2008 at 7:00 pm
So, does Rep. Frank’s proposed bill actually help out someone in Rep. Richardson’s situation in any way whatsoever? And who the heck is “Intern1″?