09-24-2008, 05:35 PM
When responsible borrowers are punished for the misdeeds of irresponsible ones, moral outrage is not unwarranted. Replace "bad company" or "bad homeowner" with "bad decision". Bad companies who make bad decisions do deserve to die, or be penalized. Just as good decisions should be rewarded. Bad homeowners (borrowers with risky credit) deserve to be foreclosed upon. Not as moral punishment, but as a natural consequence of the terms of the contract they voluntarily accepted responsibility for. Asking responsible (good) borrowers to buy irresponsible (bad) borrowers a house? This will understandably be viewed as a morally offensive, as well as economically offensive idea. But no worse than asking taxpayers to reward the bad decisions of failing financial institutions.