The Democratic-controlled Congress, who by the way has an abysmal approval rating of 17.3%, passed legislation to bail out those folks who are facing foreclosure and to underpin Fannie Mae and Freddie Mac. Pelosi and Reid may need to have elbow splints after much mutual back patting.

We at Sensible Life believe in living, well, sensibly. That doesn’t me go out and get a mortgage way beyond your means of repayment. Yet, that’s what some have done and the banks have let them. One of the reason the banks got themselves into this bind is their practice of “No Doc” and/or “Low Doc” loans - so everyone can own a house. Why would they ever think of allowing loans to folks that can’t substantiate their income?

Back in 2001, the Federal Reserve lowered interest rates 11 times to ward off post a 9/11 recession (from 6.5% to 1.75%). Arizona, California, Florida, Nevada, and Hawaii all posted record housing price increases.  As house values went up, so did mortgage equity lines of credit. Again, documentation requirements were rather shaky.

When the housing bubble burst in 2005-2006, interest rates were rising as were  costs of other goods. The sub-prime loans (mostly adjustable rates) were adjusted upward and people could no longer afford to make the payments on a house they couldn’t afford to begin with. Late summer 2007, the sub-prime lending market collapsed with 25 lenders declaring bankruptcy.

Fast forward to today where we, and our grandchildren and great-grandchildren, are going to bail out people who were living beyond their means. Don’t take this statement to mean that we aren’t supportive of those that may have been defrauded by the banking industry - the court system is the way to address that matter.

Once again, Government has decided that we’re not responsible to make our own decisions or address the realities of our own actions. No, we’re going to be bailing out all the mortgages that shouldn’t have been issued in the first place. Where’s the accountability for the bankers and brokers? What legacy are we leaving?