Representative Tom McClintock spoke before the U.S. House of Representatives yesterday, celebrating the upper class venom of Rick Santelli, who called people who can no longer pay their mortgages “losers”, and applauding the do-nothing sentiment of a bumper sticker that reads, Honk if You’re Paying My Mortgage. McClintock opposed helping Americans avoid foreclosure, saying that American homeowners in trouble had been irresponsible and reckless.
Congressman McClintock ranted, “The President tells us that if your neighbor’s home is on fire, you don’t quibble over who pays for the water. And that’s true. But as Jack Armstrong pointed out, if my neighbor burns down his house by shooting off Roman candles in his living room, I’ll be darned if I’m going to pay for him to rebuild it!”
In Representative McClintock’s metaphor, shooting off Roman candles in the living room represents the economic recklessness of American homeowners now facing foreclosure. McClintock claims that those facing foreclosure bought homes they knew they couldn’t afford, and were trying to profit using bad loans.
It’s true that there are such cases of real estate speculation gone bad, but are those cases truly representative of the home foreclosure crisis? That’s not what the evidence suggests. Patterns in home foreclosure point to loss of employment as a dominant cause of Americans losing their homes. Consider how foreclosure rates in Oregon and Idaho are rising sharply, even though those states didn’t have much of a problem with bad loans.
Huge numbers of Americans facing foreclosure bought homes that they could afford. They lived within their means. However, their means changed when they lost their jobs, through no fault of their own. Or, their means changed when they were forced to renegotiate their employment contracts, as autoworkers in Detroit have been, and executives at AIG have not been.
So, just what is the reckless, irresponsible behavior that Tom McClintock and Rick Santelli want to punish by making people homeless? Are they saying that Americans are “losers” because they went to work for companies that were poorly managed? Is McClintock saying that American workers are “losers” because management squandered the value of their labor? Are American homeowners in trouble “losers” because they couldn’t get in on top of the schemes of hedge fund players on Wall Street?
That sort of assessment may get raucous applause from people on the floor of the New York Stock Exchange, but it will get a less friendly reception from Americans losing their homes on Main Street.