The continuing and historic string of bail-outs (and they are just that) continue.  First it was an investment bank and now the cornerstones of the American mortgage market.  As a small government guy I chafe under the continuing government involvement but I agree with the actions so far: these institutions have to be unwound gradually and not with a bang.  The future for both Fannie and Freddie should involve a tombstone.  The time for centralized market makers in the mortgage industry is long since passed.  These institutions need to be broken up and sold off.  It cannot happen immediately but within the next several years as it is imperative that the government get out of that business. 

Of course, the real bums who are largely responsible for this entire mess are the regulators who should have had an eye on the throttle and the banks who made such insane loans in the first place.  I’m not a banking genius but it was becoming clear about 3-4 years ago that lending standards were falling precipitously and it was a question of when, not if, the problems would start.  I remember being bewildered when a lady I know well enough to know she couldn’t afford it bought her second $500k house.  This was so different from my experience buying my house 15 years ago that I knew it wasn’t good. 

So, the real question is how much public money goes to offset losses incurred by reckless gambling with the mortgage market in order to preserve the orderly unwinding of that mess?  I don’t know what that number is but I do know that it is near at hand.  Capitalism has a downside and those that take stupid risks must feel the sting of the downside by losing it all.   

On Monday the Council approved the first reading of the ordinance that enacts the Employee Housing program.  It sets aside a pool of money to help City employees make down payments on bank-owned or foreclosed properties in the City.  There are conditions (if they leave our employ they have to pay us back) and restrictions on the program but it’s reasonable and will hopefully get more employees in the City and get more bank-owned properties in the hands of home-owners.  The program is administered by the Manassas Housing Trust Fund who administers the existing program that is available to all City residents.

This is an important piece of Manassas Next and I’m glad the staff worked it through to completion and the Council approved it.   WaPo article is here.