Re: Will Ordinary People Continue To Have To Pay Unaffordable Rates Of Interest After The Bailout?
By Lawrence Velvel
Dean, Massachusetts School of Law at Andover
I would like to ask a question about the bailout. The question comes out of ignorance, or perhaps because I've seen so
little (or no) reference to it in the media. The questions is: under the bailout, what will happen to the mortgage rates
paid by persons who have adjustable rate mortgages? These persons often were sucked into, and even criminally defrauded
into, mortgages they would be unable to afford after the adjustable rates rose. Their inability to afford the higher
rates was a major cause -- probably the cause -- of the current debacle. But, as near as I can tell from the media, they will still have to pay higher, probably
unaffordable rates after the bailout -- that is, if they haven't already been foreclosed upon and lost their homes. If
they still have to pay higher and unaffordable rates -- which I guess they will except in the unlikely event of a drop
in rates that is both large and permanent -- they will continue to be drastically hurt even while Wall Street is bailed
out, ultimately will likely lose their homes, and we would seem on these accounts to be headed for further disaster in
the future.
Maybe what I've said above is all wrong. But if it's not wrong, and more particularly, if people with unaffordably high mortgage rates will continue to be liable to pay those
rates, why is nobody discussing this, what permanent good will the bailout do, and, even if the bailout helps the heavily monied class (the residents of Richistan), isn't
it doing nothing for the millions of less affluent who got sucked into unaffordable mortgages?
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