Don't just do something, sit there.

I once staffed an organization that issued industrial revenue bonds -- bonds of a last resort to businesses who couldn't otherwise get money to finance their projects.  Members of the board included local utility representatives, business owners, bankers and representatives from the local government.  The board would review applications and decide whether or not to recommend bond issuance. 

I remember a poignant moment when one of the banker representatives said: "I have a problem with this process.  I'm in the business of issuing loans to worthy projects.  This project couldn't get financing because it didn't meet the standard for a loan but I am supposed to suspend my judgment and recommend this bond because it is government-backed?  That just doesn't make sense."  He was a smart man and everyone just sat there for a moment. 

If memory serves me, the bond was issued but I don't think that the business survived.

Nicole Gelinas expresses similar concerns about the Senate's "Foreclosure Prevention Act of 2008" at City Journal:

"Problems abound with each part of the bill. The $100 million of foreclosure-prevention counseling is preordained to be ineffectual without an even larger taxpayer bailout: if you can’t afford your mortgage, counseling won’t help. The $4 billion in block grants will allow city and state managers to buy properties from grateful banks at still-inflated prices and plunge into the property-ownership and landlord business—a business at which government has never excelled."

I previously posted an excellent editorial on the mortgage crisis, by Gelinas, here.


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