Reader TTS

Sept. 4, 2007 5:31 AM PT _This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts._ Good morning. Barack Obama wants to

fine unscrupulous lenders to pay for a housing bailout. The Financial Times: ‘Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the

proceeds used to help bail out borrowers facing a wave of foreclosures, according to Barack Obama.’ OUR FIRST TAKE ON THIS IS THAT IT IS LIKELY IMPOSSIBLE AND PROBABLY NOT A SERIOUS

PROPOSAL, AND IS A PIECE OF POSTURING. We’d like to be proved wrong on that, but how does Congress get money out of New Century Financial and scores of other subprime lenders that are out of

business? Get in line in bankruptcy court? Who determines which subprime loans are ‘deceptive’? And, as commenter Tim K. points out, how do you separate the truly deceived borrowers from

the speculators and flippers who were gambling on real estate with someone else’s money? From the FT: ‘Mr. Obama blamed lobbyists working on behalf of lenders for obstructing tougher

regulation of the subprime industry, adding: ‘Our government failed to provide the regulatory scrutiny that could have prevented this crisis.’’ MORE OF OUR TAKE: This is certainly true; it’s

also true that Sen. Obama and the Democratic Party were part of that government failure. Blaming lobbyists is a campaign theme of his -- a shrewd one, we think -- intended to paint Sen.

Clinton in an unflattering light. We’d like to give you a link to the entire Obama proposal -- an op-ed in today’s Financial Times -- but it is behind an expensive pay wall, and L.A. Land is

cheap. (What’s up with that, writing about the American housing crisis in a British newspaper?) Here’s the part that proposes a bailout: ‘One way to protect innocent homeowners –- at least

until this crisis passes –- is to establish a fund to help people refinance or sell to avoid foreclosure. We can partially pay for this fund by imposing penalties on lenders that acted

irresponsibly or committed fraud.’ _Your thoughts? Comments? Insights? Hat Tip: Tex_