In anticipation of Obama’s “Homeowner Affordability and Stability Plan,” announced yesterday, I was planning to write a post with the title “Life isn’t Fair,” because I was quite sure the plan would be designed to rescue the worst cases, whether or not the buyers had been responsible in their judgment and motives. Such a plan, while being prudent economically, was certainly going to be criticized by those who were responsibly making their payments, despite the decreased values. I assumed the inequities would be enormous and the outcry loud.
I’m happy to report I was wrong. The plan is equally weighted to assist those who are currently resolutely struggling with their payments and the devaluation, as well as those who are at risk of foreclosure because they are no longer able to keep up the payments. A succinct summary of the plan is in this New York Times graphic. The plan is targeting as many as 9 million households at a proposed cost of about $775 billion. It’s not perfect, but it’s fairer, more aggressive, and more far-reaching than had been predicted—and for that, Obama and his team are to be praised. They will also be criticized, because the plan isn’t perfect; it can’t rescue everyone. In his remarks, Obama tried to portray some realism along with the expected picture of optimism.
“This plan will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”
There will still be a lot of pain, and we can assume there will be a great deal of inequity and chaos in the attempts to focus the assistance toward those who truly deserve it and who are also in a reasonably stable financial situation. The details are complex but the rules are intended to provide unambiguous guidelines for implementation. As it still depends on individuals and banks to do the right thing, there will no doubt be far too many who will attempt to abuse the plan for self-interest, whether personal and institutional.
So, my original thesis is still relevant. If you expect that this plan will actually separate the greedy from the responsible, it will be a disappointment. I think we can’t hope for that; more realistically, we can hope it will do far more good than harm and will therefore provide a needed palliative to our very drastic financial situation.
If you were lucky, you learned while young that life isn’t fair. The difference between the fortunate and the unfortunate doesn’t parallel with the deserving and undeserving. There are those who achieve desired goals because of hard work and perseverance or natural capability, but there are also those who get there because of unfair privilege, unfair tactics or luck. It’s an immutable fact mankind has lived with through all recorded history and before. If you can’t achieve some detached objectivity about this, you could spend your life paralyzed by anger, resentment and cynicism. On the other hand, if we don’t always fight back against injustice and unfairness, we become enablers. It’s a fine line.
The banks and bankers, who are getting bailed out of the holes they dug for themselves, and for all of us, simply do not deserve the charity they are receiving. If you think about this long enough, it will drive you crazy. But here we are, with a housing plan that now depends on these same institutions to stem their own greed and reach out to millions of desperate people. We now hope they will act in accordance with a vision that is nearly the opposite of the way they acted when they let loose these “financial instruments” in the first place. Will the foxes really shore up the henhouse?
There are lots of potential problems with Obama’s plan. It will be easy to poke holes in it. In the end, though, this plan would be wildly successful if all the players can summon some human compassion and put the greater interest of the country ahead of their own. But that won’t happen often enough, and the oversight won’t prevent abuses. Be prepared to find fault, but place the blame where it belongs. Obama and his team have done a good job, whatever the plan’s problems; it is now time for all citizens of this country–corporate and private–to buck up and do the right thing.