In America, we seem to be enamored with the idea of being self-reliant (and rightfully so). As we contemplate our history, we gravitate to stories of the self-made. We love tales of millionaires who started with nothing, of businesses that have been successful against all odds, and of an unlikely group of heroes who rose from oppression and tyranny to lay the foundations of America’s success.So, when Congress finds a way to become self-made heroes, it shouldn’t surprise any of us. One secret desire of virtually all elected representatives is to be remembered fondly when they leave office, regardless of their actions while in office. And, while this Congress has set a few records, they are not the kind of records that will guarantee eternal popularity. They therefore find themselves in the desperate position of having to engineer their fame by “solving” some major problem. It ought to make us question, just a little, when they problem they choose to tackle is a problem of their own creation.

As the mortgage market continues to crumble, the media (at the bidding of politicians) is quick to point out “predatory” lenders and “innocent, victimized” borrowers. All of this is simply setting the stage for the heroes to march in, slay the evil corporate dragons, and save the day. It needs to be asked, however, if the accusation of predatory lending is even accurate. Granted, the mortgage industry has its demons. But, Thomas Sowell, conservative economist and author, suggests that it was Congress that prompted predatory lending in the first place.

He explains, “It was not that many years ago when there was moral outrage ringing throughout the media because lenders were reluctant to lend in certain neighborhoods.” To solve the apparent inequality, Congress pushed to make “redlining” (the practice of not lending in depressed neighborhoods) taboo. In Sowell’s words, “In our own personal lives, common sense leads us to avoid some neighborhoods. If you want to call that “redlining,” so be it. But places where it is dangerous to go are often also places where it is dangerous to send your money.”

The discriminatory nature of redlining makes it a natural target for socialist would-be-heroes. And, when the unintended consequences of eliminating such a practice kick in, there is yet another problem for the heroes to solve. In short, the “the Community Reinvestment Act forced (lenders) to lend in places where they did not want to send their money, and where neither they nor the politicians wanted to walk.”

In a free market system, businesses are able to determine who they will do business with, what risks they are willing to assume, and what to avoid. Government intervention forced lenders to accept all comers, even when it was a bad business decision. Loans were given to people who should not have had them, and the lenders are now being painted as predatory. And the stage is set.

Enter the heroes (obviously from stage left). On Wednesday, “rescue legislation sailed through the House…aimed at helping 400,000 strapped homeowners avoid foreclosure.” After helping put under-qualified homeowners into a situation that was likely to end in foreclosure, Congress is now making moves to ‘save’ them. The legislation would provide $3.9 billion in grants “for buying and fixing up foreclosed properties” and was easily passed because it focuses on “dealing with the consequences of bad decisions and inaction and malfeasance from years before.” When speaking of “malfeasance”, however, Rep Barney Frank (D-Mass) is pointing at lenders, rather than at his colleagues. Incredibly, his colleagues will be lauded by the media and the public.

The problem here is that the heroes don’t understand heroism. Rather than stand for what is right, they choose to stand for what is convenient, popular, and personally beneficial. The Whitehouse and most Republicans were against this bill. But, at the last moment, the President decided to put his support behind it because “a showdown with Congress over the proposal would be ill-timed.” No time like the present, Mr. President, especially when the ramifications of this decision will only ensure the collapse of the mortgage market that you are trying to avoid. The 45 Republicans that voted in favor were generally “from districts ravaged by the housing crisis and some facing tough re-election fights”. The plight of one’s constituents is no basis for violating principle. Nor is the desire to be re-elected. Such moves do not make a hero.

As Thomas Sowell put it, “Politics is largely the process of taking credit and putting the blame on others– regardless of what the facts may be. Politicians get away with this to the extent that we gullibly accept their words and look to them as political messiahs.”

True heroism is about courage, nobility, and honor. Heroes stand for principle, not for issues or situations. Michael Josephson said, “People of character (heroes) do the right thing, not because they think it will change the world but because they refuse to be changed by the world.” Much to their chagrin, this Congress will never be seen as heroes by those who understand heroism and principle.

Sources

Thomas Sowell, “Bankrupt “Exploiters””, TownHall.com, July 22, 2008.

Julie Hirschfield Davis, “House OKs rescue for homeowners, Freddie, Fannie”, Associated Press, July 24, 2008.