$200 Million Mortgage Plan Not Enough for Networks

      After Treasury Secretary Henry Paulson’s plan to rescue America from the “mortgage crisis” was revealed December 5, networks attacked the plan with left-wing criticism, saying that the costly plan would not affect “enough people.”

      After Treasury Secretary Henry Paulson’s plan to rescue America from the “mortgage crisis” was revealed December 5, networks attacked the plan with left-wing criticism, saying that the costly plan would not affect “enough people.”

 

     “It sounds as if it doesn’t help anybody who had their mortgage rate increased or got foreclosed in 2007,” protested Charlie Gibson anchor of ABC’s “World News with Charles Gibson.” That broadcast aired December 5.

 

      “CBS Evening News” tried to pull heartstrings by sympathizing with a Texas couple who “can’t afford” to keep their large ranch home—including horses—supposedly because of the rate increases on their mortgage.

     “This is a case where the devil truly is in the details,” said “NBC Nightly News’” Brian Williams of Paulson’s plan “to save hundreds of thousands of Americans from foreclosure.”

 

     Williams then called on “CNBC’s expert on these matters,” Diana Olick, who complained “dividing up all the borrowers will be a bureaucratic nightmare.”

 

     Olick went on to point out how some borrowers will be “left out,” implying the plan will fail to help every borrower who is struggling, despite irresponsible choices they might have made.

 

     Paulson’s plan would cost taxpayers at least $200 million according to the December 6 The Washington Post—money that will pay to staff counseling hotlines for worried homeowners. The networks didn’t ask about the cost of the plan and downplayed criticism of bailouts.

 

     But Seth Jayson of The Motley Fool explained who would actually end up paying for the Paulson plan. According to Jayson, the plan would result in even “crunchier” credit – something the media have already been complaining about – and punish future borrowers because the lenders losing money on a rate freeze would have to recoup that somehow.

 

     “[Y]ou can bet they’re going to pass along the costs. They’re going to do it by firing employees … They’re going to do it by moving offices to offshore tax havens, outsourcing, closing branches, lowering deposit rates, hiking fees, and whatever else it takes,” wrote Jayson.

 

     Others, including presidential candidates, have announced even more radical and expensive bailout plans than Paulson.

 

     Sen. Hillary Clinton (D-N.Y.) has proposed a plan that called for as much as $5 billion to help borrowers through the “crisis.” On December 5, CNBC’s Maria Bartiromo asked Clinton how she would find the funding.

 

     “It’s going to come from where it comes from, the budget,” Clinton said before admitting it would come from emergency spending.

 

     While the “Evening News” did note that if investors carry most of the plan’s cost it could “make it harder for everyone to get loans,” it was a far cry from critics like Fool’s Jayson and John Berlau who claim the plan to be bad for the future of America’s economy.

 

    “The five-year interest rate freeze by its design would pretty much have only negative effects and worsen the credit slowdown” noted John Berlau, director of the Competitive Enterprise Institute, on December 6.

 

     Jayson of The Motley Fool has also cautioned about the message any sort of bailout sends to the parties involved.

 

     “When the government takes on the risk that lenders should hold, it lowers the cost of lending,” he wrote. “And that, as recent history has shown, makes people do all sorts of silly things – such as, say, sign up for terrible teaser-rate ARMs.”