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Obama and Caveat Emptor

by Tony Medley 

Here’s what Barrack Obama said January 27, 2008 on “This Week With George Stephanopoulos” on ABC about the housing crisis:

 “We should put forward a $10 billion fund (that’s TEN BILLION DOLLARS) to focus on helping families that are in their homes that have been induced into mortgages that they can’t pay…That will prevent…lenders who have made bad loans somehow are bailed out.


 “It’s important not to bail out lenders who made poorly considered or speculative loans. What is important is to make sure that people are staying in their homes, particularly first time buyers. I think we have to sort through how we can help those individuals aggressively at the same time that we are not bailing out banks who have made loans that they shouldn’t have made.”

In other words, this is the same old Democrat litany that people should not be responsible for their actions. These people who signed up to the mortgages did so of their own free will. But according to Obama, they were “induced.” According to Obama, it is the banks who made the bad loans they shouldn’t have made, not the borrowers who accepted bad loans they shouldn’t have accepted. There was nothing illegal about the mortgages they signed. They signed them mostly because they didn’t have to put much, if anything, down. How much they would have to pay in the future was there in black and white.

But when it comes time for them to have to pay what they agreed to pay and they are financially incapable of doing so (something they undoubtedly knew would occur), Obama blames the lenders, not the people who were trying to get something for nothing.

Like most Democrats, he flips the issue. It’s not the borrowers who signed up to loans they knew they couldn’t fulfill. No, according to Obama, it’s the lenders who made loans they shouldn’t have made! This is socialism at its worst. These were deals that both parties entered into at arm’s length. The borrowers were arguably represented by real estate agents, sometimes by attorneys. They knew exactly what they were getting into. They knew what they could afford. They knew what their future held better than the lender. They jumped at the deal because it allowed them to live in houses that were beyond their means. Further, the obligation down the road was clearly spelled out in black and white. They knew that eventually they would have to pay the piper. Nobody held a gun to their heads forcing them to agree to the loan. But according to Obama, it was all the lenders’ fault.

Now he wants to not only protect the foolish buyers, he wants not only to punish the lenders who made honest loans, he wants not only to reward the greedy people who signed up for the loans, but, worse, he wants the taxpayers, like you and me, neither of whom signed a foolish mortgage, to pay for the people who did.

 Our economy will survive only if it comports to the free market principle and Caveat Emptor, which states that the buyer alone is responsible for assessing the quality of a purchase before buying, and that applies to someone signing up to a loan. If the buyer enters into a bad deal, the buyer must live with it. We can’t survive if we force the taxpayers who didn’t enter into bad deals come to the rescue of those who did. I hope that in one of the debates to come, somebody asks Obama if he agrees with the doctrine of Caveat Emptor.

July 31, 2008