Romney ran a photo-op in Florida today with a few foreclosure victims, trying to lay their pain at the feet of former Fanny/Freddie “historian” Newt Gingrich. But it appears the Romneybot had a misfire while trying to sympathize with one of the victims (emphasis mine):
I happen to agree with what Romney is saying here–the mortgage debt held by many banks is suspect either because of overextension or fraudulent practices. But this is actually to the left of the Obama administration, who is currently bent over backwards to avoid having the banks face a real day or reckoning.
When the foreclosee also mentioned that his wife is a realtor now filing for bankruptcy, he went on:
So…Mitt is recommending strategic default to homeowners, moral hazard be damned. I thought only our corporate overlords were afforded that luxury.
My guess is Mitt will be walking back these comments as soon as John Thornton gets him on the phone. Frankly I think his reaction stems from a natural application of principles he followed in private equity (e.g. if the debt isn’t worth servicing or looks suspicious, just default and move on), but it also seems kind of muddled–he hasn’t really thought thru the issue or considered the position of his banker-friendly party. Either way, I’d be surprised if Newt doesn’t use this in the debate tonight…
Eh, FWIW, I agree with Mitt here. But it’s bizarre to call him a socialist. He’s a professional capitalist, and he’s talking like a sensible capitalist here.
I’m obviously being facetious, but if all the GOP candidates consider Obama’s economic policy to be socialist, and one of them supports a policy to the left of Obama…as Mitt would say, “what’s sauce for the goose is now sauce for the gander.”
Do you think anyone in this thread is seriously calling the Mittster a socialist? (I’m not sure if you do or don’t, just asking.)
Because all I see is a plea for a little consistency. To call Obama a socialist would be disingenuous or stupid, so it’s only fair that the people who do so also call Romney a socialist, since they have supported broadly similar policies.
Dude’s a senator, caucuses with the majority party and is a longtime political fixture in his (admittedly small) home State. What else does he have to do to be considered “mainstream”?
Strategic default is not a moral hazard issue. It’s a perfectly legit business decision, as has been discussed about 10 millions times already on this message board.
You have a contract with the bank or institution holding your mortgage: make your mortgage payments or they get your house.
Paul Krugman defined moral hazard thusly: “any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly.”
Looks like the “bot” in question here is the OP, whose knee-jerk reaction was that if Romney said something, he must be wrong.
What Romney is proposing, from the OP’s link is exactly what you’d propose to avoid a moral hazard:
I agree, but that’s not the problem: The problem is that Romney’s words now are inconsistent with his statements in October that we should “not stop the foreclosure process”, and I suspect many in the GOP (like, I dunno, the attorney general of a state about to hold a primary) would think strategic default encourages moral hazard.
My comment about moral hazard was meant sarcastically, as was my comment that Romney is now a socialist based on this. I thought that was rather obvious, but perhaps I underestimated just how hard it is to discern the sarcasm when the “normal” positions of the Republican candidates are so ridiculous.
Mitt, for once, is being consistent. When Bain took over companies, they forced the companies to take on debt to buy out Bain (with fees of course.) If the debt proved too much, the companies walked away from the debt by declaring bankruptcy.
What is new here is his first statement, which isn’t about the homeowner defaulting but about the bank renegotiating the loan and writing off some of the debt. Is that a common Republican position? Is Mitt so shaken that he is returning to his liberal ways?
These are fair points, and I can see why one would want more consistency, but much more I would like to see people no longer using the term socialist to describe mainstream US politicians (other than Bernie Sanders :D) because it does not really serve as an accurate description of political stances in most cases, but is really intended to offend and scare off. It pollutes the debate (which I’m sure people in this thread feel as well).
Actually I was not aware of this Senator, it’s been interesting reading up on him! I’ll have to amend my blanket statement to include him in the future.
That’s not “strategic default”. That’s an attempt to force the banks to restructure the loans, which does have an aspect of moral hazard. Strategic default is when the homeowner decides to walk away from the loan the let the banks foreclose on the property. That’s how the original contract was written, and letting it play out without interference is how how avoid moral hazard.
Yeah, when people don’t get your sarcasm, it’s their fault. :rolleyes:
Why don’t you restate your case without sarcasm and let’s see how it stands up.
I agree; if you want an argument, take it up with the GOP. In the summer of 2010, they introduced a motion in the House to penalize strategic defaulters by forbidding them from obtaining FHA loans. I think it’s fair to say that the GOP is not in favor of strategic default (whether or not they directly call it a “moral hazard” is only a question of the rhetoric they use; though I think in this case you’re splitting hairs, I’ll concede the AG’s never directly called strategic default a moral hazard).
Romney’s latest comments seem to endorse strategic default. This appears to contradict his previous statements and the expressed concerns of the GOP establishment regarding strategic defaults by the “wrong” sort of people–you know, the ones who may actually need FHA loans (dog whistle!). If Romney stands by his current position, he is to the left of these Republicans and (IMO) to the left of Obama’s banker-friendly policies. Therefore, if the GOP thinks Obama is a “socialist”, wouldn’t Mittens also qualify?
To be fair, I really can’t understand how anyone could think calling Romney a “…socialist?” should be taken at literal face value. I also don’t really believe Romney is literally a robot, nor do I claim to have a photo where President Obama is literally bent over backwards when dealing with banking issues. Yes, that is also sarcasm.
