Molly Ball, a reporter who interviewed me at the very first Yearly Kos when she was at the Las Vegas Review-Journal, and who now writes for The Atlantic, decides to make giant pronouncements about the “hard right” and “hard left” positions in the housing debate.
In the politics of housing, “On the one hand, there is some of that Rick Santelli rage,” said Matt Bennett of the center-left think tank Third Way, a former Clinton administration official. “There’s real discontent over the idea that people who acted irresponsibly are getting a bailout or a break, while people who are struggling to manage their underwater mortgage while paying their bills aren’t.
“On the other hand, there’s the idea that the government had better do something, because this crisis is destroying property values, destroying neighborhoods, and greatly dragging down the economy generally.”
There’s a hard-right position — that government should stay out and let markets take their course, without trying to mitigate the collateral damage. And there’s a hard-left position — that the government should just bail out homeowners the way it bailed out banks, regardless of whether they “deserve” it. Both are broadly unpalatable.
Set aside the pants-wetting fear that elites like Matt Bennett make a pose at, as if fear of Rick Santelli is to blame for allowing the banks to get away with systemic fraud. But let me correct Molly Ball’s impression. The “hard-left position” is that entities who break the law should pay the price. I know it’s a real inconvenient point these days, but it happens to be the fact.
You can see Eric Schneiderman, above, in his first national TV interview in months, expressing a form of this with Rachel Maddow. “I’m a prosecutor,” Schneiderman says, explaining that he and his allies like Beau Biden, Delaware’s AG, felt they needed to do an actual investigation on the misdeeds of the mortgage lending industry during the bubble years.
“It’s really not all that obtuse… this was a man-made crisis, it was caused by regulatory neglect and greed… we think we’re going to be able to obtain real, meaningful relief… we think we have to hold accountable the people who caused this disaster, and just as important, we gotta get this out in the open so they can’t rewrite history.”
That’s a pretty good nutshell summary of the alleged “hard left” case. There are people who broke the largest market in the world, the US residential housing market. We know who they are. We can investigate them to learn the extent of what they did. And then they can, by way of a penalty, provide the relief that millions of homeowners need. Unless you consider the criminal justice system to be “hard left,” there’s nothing remotely ideological about that position.
The hard right position, the counterpoint to this belief in the rule of law, comes from Larry Summers:
Fifth, there were clearly substantial abuses by financial institutions and most everyone in the mortgage industry during the bubble. Just compensation to the victims is a legitimate objective. But allowing negotiation over past actions to be the dominant thrust of policy creates overhangs of uncertainty that impose huge costs on the financial system and inhibit lending. A rapid resolution of disputes is equally in the interests of bank shareholders and the housing market. The FHFA should be striving to rapidly conclude this period of uncertainty.
That’s the “hard right” position, that crimes should be wiped away in the name of reducing uncertainty. I know where I stand.