A subprime solution

The governator and Treasury Secretary Henry Paulson visited Stockton this week with a few words of encouragement for those facing foreclosure: ride it out.

Not exactly what folks were looking for. But really, what else is there to do?

Congress and the government can take on predatory lenders for the good of the economy — folks who were in business actively deceiving and fleecing buyers don't deserve to be in business any longer. But a bail-out for Average Joe or Average Corporation doesn't seem like good business.

I hate to be heartless here, but the subprime mortages were business ventures that came with inherent risk. It's like the stock market. If I sink $5,000 into a company and it goes belly-up, I'm not entitled to government compensation for my poor investment. (And if I was willfully swindled by that company, it's the company, not the government, who owes me compensation.)

The same principle applies to the mortgage meltdown. This is the predictable outcome of people entering into loan agreements which they couldn't possibly live up to. To punish lenders — or taxpayers — for the good-faith bad business decisions of these homeowners makes no sense whatsoever.

To bail out the corporations who bundled these risky mortages as investment vehicles would be even worse. That's rewarding high rollers for making edge-of-the-knife decisions that are likely to go bad. What's to prevent them from repeating the practice when Uncle Sam's waiting with another check? These financial "gurus" knew what they were doing. Their crocodile tears don't impress me.

I believe the government should help people, and I believe in a fair playing field. But this is one instance in which government help will ultimately hurt. My heart goes out to all the people facing the loss of a home. But the government shouldn't be responsible for covering a risky bet that both borrowers and lenders lost.