Future President John McCain said in his Mar 25th speech from Santa Ana, Ca that it is not the governments responsibility to bail out irresponsible borrowers and lenders. Here is a quick rundown of some of the highlights from his speech:
"Between 2001 and 2006 housing prices rose by 15% every year. The normal market forces of buying and selling homes was overwhelmed by market speculation. Our system of market checks and balances didn't correct this until the bubble burst."
"Rising home prices made many home lenders complacent giving them a false sense of security and lowered their lending standards.... Lenders ended up violating the fundamental rules of lending by loaning money people couldn't pay back.
"There are 80 million home owners in America that are facing the reality that the bubble has burst. Of these 80 million homeowners only 55 million have a mortgage at all... 51 million are doing what they need to make their payments... Only 4 million homeowners are causing these problems that are effecting us all...."
"Capital markets work best when there is both accountability and transparency. In our current crisis, both were lacking. This has caused a crisis of confidence in markets. Market players are increasingly unnerved by the level of risk, liability, and lost in the financial market. ... Credit is drying up, and liquidity is severely limited. Many business are unable to get their usual loans."
"The problem with subprime loans has no convulsed the entire financial system."
"Jon McCain pledged that he is not going to "Play politics with the housing crisis, I will evaluate everything in terms if it might be harmful or helpful to deal with our crisis we face now.... It's not the duty of government to bail out and reward those who act responsibly"
He said that government assistance should only be for primary residences, and any assistance should only be temporary. Government assistance should only be to insure that problems like these never happen again.
Policy should move towards ensuring that homeowners provide a responsible down payment of equity at the initial purpose of a home. He opposes reducing down payment requirements for FHA mortgages, and thinks that they should actually be raised.