Rick Santelli’s televised rant against the “losers” and “deadbeats homeowners” that kicked off last week’s “spontaneous” Tea Party rallies was aimed at the wrong target, says Dean Baker, co-director of the Center for Economic and Policy Research (CEPR) and bearded high-profile economist (there’s a club).
At the risk of spoiling a promising artistic and commercial venture, people should know that Mr. Santelli is firing at the wrong target. The big gainers from the latest plan to help homeowners are not “loser” homeowners, but rather banks and investors, who will earn far more on their loser loans than would otherwise have been possible.
This is easy to see if we just adhere to the most basic rule in policy analysis: follow the money. When we follow the money, we see that the government checks do not go to homeowners.
The government checks are all made out to banks and loan servicers. In millions of cases where homeowners were not keeping up with their mortgages, the government will send checks to banks and investors that make up for much of the shortfall. In addition, the government could send them several thousand dollars more for their efforts in allowing people to stay in their homes.
Hat tip: Truthout
