Editorial: Bailout enables risky behavior

It seems ironic that both houses of Congress approved spending more than $700 billion to bail out financial companies in October, which is National Domestic Violence Awareness Month.

During this month we are flooded with information about the problem of abuse, and are warned about the dangers of codependency and enabling. Often that information comes straight from the lawmakers themselves, in the form of public service announcements.
The bailout falls squarely within the definition of enabling behavior.

Analysts and advocates have long addressed the added problem of enabling, where friends, family and associates help a person avoid the consequences of bad behavior. The advocates often warn that an abuse victim who covers for the abuser, who tries to justify the abuse, will only be victimized again.

The same holds true to those who succumb to addictions and other self-abusive behavior. Spouses who turn a blind eye, parents who cover for their children when they encounter law enforcers or other authorities, only shield the substance abuser from the repercussions of the abuse.

Congress has done just that by approving the bailout package. In doing so they didn’t just save the giant financial institutions that probably are too bloated for their own good anyway; by allowing them to avoid any painful consequences of their actions, they essentially are enabling those financiers to continue the very high-risk behavior that got them in this trouble in the first place.

Everyone has made it far too easy for the lenders — and Congress, which drew up the rules under which they operate — to blame borrowers for taking variable rate “subprime” mortgages, but in many cases those are the only loans they could get. It is also reasonable to assume the lenders, which have a history of making thousands of these kinds of high-risk loans, are better equipped to know the risks involved than borrowers for whom buying a home can be a once-in-a-lifetime transaction.

It’s easy to say in retrospect the lenders should have taken more steps to better inform borrowers, but let’s face it: doing so might have scared away some business, and after all, they’ve always been able to rely on their friends on Capitol Hill to bail them out, haven’t they?
Just like this past week.

Perhaps the saddest part of this debacle is that so much of the American public actually saw right through the doom-and-gloom rhetoric. They knew that as long as they continued to make their own mortgage payments — and the vast majority of them do — they have nothing to worry about. As long as they maintain good credit records, they’ll always be able to find someone who will lend them money and take their interest.

Unfortunately, it isn’t the borrowing public that makes lawmakers rich with their political donations and in-kind contributions. And their investment has been rewarded: Congress, itself addicted to the contributions and attention they enjoy from these financiers, allowed them to escape any pain.

People can hope the lenders have learned their lesson. We’re certain they have. They learned they can continue making high-risk loans and maintaining accounts that aren’t sufficiently liquid. After all, Congress has only enabled the continuation of their errant ways by shifting the pain from the abusers to the taxpayers.