Economist's Commentary: September 26, 2008

The Bailout Package: Your Responses

By Meredith Dunn, Research Communications Representative

Lawrence Yun's recent commentary on the $700 billion bailout package triggered a much higher rate of feedback from readers than usual. Overall, the responses were slightly more negative about the proposed bailout than positive. With the understanding that positive feedback is fairly self-explanatory, here are some of the negative comments we received:

• What good is it to have the taxpayers buy all this bad debt?
• The bailout will not work. It will only delay the inevitable.
• Your recommendations are that we the taxpayers should foot the bill for these large corrupt companies.
• Inflation and interest rates will shoot sky high.  We will 'stagflate' ourselves out of business.
• You cannot just throw money at a problem.
• There is no question that the U.S. economy needs revitalization, but a mass bailout of the financial community will not create the new economy we need.

First of all, we appreciate all of the responses - negative or positive. As the health of the economy affects us all, there are bound to be many differing points of view on the best way to go about turning it around. However, perhaps we can clear up a few misconceptions by clarifying NAR's stance on the bailout.

NAR supports the overall concept of restoring liquidity and stability to the financial system to prevent a freeze in the flow of credit into the mortgage market. The current crisis is not limited to Wall Street. Because of the serious potential impact on all Americans, we support responsible government intervention that will benefit current homeowners, potential homebuyers, financial institutions, the economy, and ultimately the taxpayer. Moreover, we support efforts that will stabilize financial markets to allow the rational valuation of assets, expedite refinancing and relief efforts for homeowners, and other measures to re-establish a level of confidence in the housing credit markets. If structured and managed effectively, such a plan will cost far less than the $700 billion in authority that is being talked about in the media, and there is even a chance taxpayers will come out ahead in the end.

Lawrence Yun said at the home sales release press conference on Wednesday that "without action to free the flow of credit into the mortgage markets, home sales will remain constrained. The faster Congress acts to relieve this constraint, the sooner we'll see a broad stabilization in home prices that in turn will help the economy recover. Historically, housing has led the nation out of economic downturns - there will not be an economic recovery without a housing recovery."

While the final package is still being crafted by Congressional leaders of both parties and the Department of Treasury, it is clear that the initial proposal by Secretary Paulson will be adjusted to address the concerns that our members, and the majority of Americans, have regarding this historic intervention. As this situation continues to evolve, be assured that NAR will continue to urge Members of Congress and the involved federal agencies to act quickly in order to protect the interests of our diverse membership and U.S. taxpayers in order to bring stability to our nation's housing and real estate markets and the overall economy.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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