April 7, 2008
Be Careful What You Wish For
Arnold Kling
Remarkably, the Post editorial writers seem to be the only ones who have noticed that the Senate "Foreclosure Prevention" bill will give banks an incentive to carry through foreclosures. The bill would give a $7,000 tax credit to buyers of foreclosed properties.
While there could be some rationale to having a credit like this for homes that had already been foreclosed and been allowed to deteriorate, it makes no sense to allow the credit to apply to homes where the process has not yet been completed. This effectively gives banks an incentive to carry through the foreclosure
He is referring to this editorial, which concludes,
the legislation looks like an election-year turkey, stuffed and cooked to order for lobbyists.
When you wish for government intervention in something like the "foreclosure crisis," this may be what you get.
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