I would like to ask a question about the bailout. The question comes out of ignorance, or perhaps because I’ve seen so little (or no) reference to it in the media. The questions is: under the bailout, what will happen to the mortgage rates paid by persons who have adjustable rate mortgages? These persons often were sucked into, and even criminally defrauded into, mortgages they would be unable to afford after the adjustable rates rose. Their inability to afford the higher rates was a major cause — probably the cause — of the current debacle. But, as near as I can tell from the media, they will still have to pay higher, probably unaffordable rates after the bailout — that is, if they haven’t already been foreclosed upon and lost their homes. If they still have to pay higher and unaffordable rates — which I guess they will except in the unlikely event of a drop in rates that is both large and permanent — they will continue to be drastically hurt even while Wall Street is bailed out, ultimately will likely lose their homes, and we would seem on these accounts to be headed for further disaster in the future.
Maybe what I’ve said above is all wrong. But if it’s not wrong, and more particularly, if people with unaffordably high mortgage rates will continue to be liable to pay those rates, why is nobody discussing this, what permanent good will the bailout do, and, even if the bailout helps the heavily monied class (the residents of Richistan), isn’t it doing nothing for the millions of less affluent who got sucked into unaffordable mortgages?
Won’t somebody answer these questions? Shouldn’t the media be asking them?
Lawrence Velvel is Dean, Massachusetts School of Law at Andover
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