Many Americans who have voiced their opposition to the rescue plan are
against bailing out those who acted recklessly in extending mortgages to people
who couldn’t afford them, against bailing out those consumers who knew that the
loans they were securing were beyond their means to repay, and against bailing
out bankers and investors who traded in mortgage backed securities they should
have known to be unreasonably risky. These arguments certainly have merit, but
there are a number of other factors that make intervention a necessity, and,
because the bill has become law, listing all of the reasons cited by its
proponents isn’t necessary here. We would like to point out a few,
however, that we didn’t hear in the course of post-vote interviews.
Beyond the most obvious outcomes of foreclosure - the need for some
sort of immediate replacement housing, the cost to banks (reportedly $50,000 per
home), the significant damage to the homeowner’s credit, and the lowering of
property values, there are serious social and workplace implications that cannot
be ignored. For example, financial stability is essential to the physical and
emotional health of most adults. In times of personal economic hardship, people
often experience illness and depression. They are incapable of performing to
their full potential at work, resulting in an alarming loss of productivity. A
Yale
University study indicated
that those who suffer from depression, a symptom of financial distress, are
seven times less productive
than their stress-free peers. Apart from everything else, America cannot
afford to lose productivity at a time when the economy is already faltering.
At home, the toll that financial problems take can be even more
devastating, since money troubles often lead to the dissolution of marriages
and the destruction of families. An estimated 2,000,000 children have
already been affected by foreclosures since the mortgage crisis began.
In addition to the obvious loss of innocence, many of those children will
suffer long-term complications, depending upon the circumstances and
duration of their displacement. Homeless shelters across the country,
including the network to which
Cambridge
provides counseling services, are currently reporting dramatic increases in
the numbers of families seeking refuge, and the strain on already
under-funded social service agencies will only increase if nothing is done
to stem the tide of foreclosures. The solution is simple - the government
must take immediate action directly on behalf of residential homeowners.
