It sure must be nice to live in Assembly Speaker Shelly Silver’s consequence-free world – where Joe and Eileen Taxpayer can always be hit up to cover the losses of their less prudent neighbors.
Yesterday, Silver and his Assembly pals proposed socking taxpayers with a $180 million tab to bail out strapped subprime mortgage borrowers.
Now, if Albany were flush with cash, such a move would be merely wrong-headed and unfair. But with lawmakers already planning to spend $4.3 billion more than they collect in revenues next fiscal year, it’s beyond reckless.
In microcosm, it’s precisely this kind of thinking (it’s OK to spend more than you earn) that has led to so many borrowers facing foreclosure in the first place. Question is, who’ll bail out New York when it can’t pay its bills?
Oh, yeah: Joe and Eileen Taxpayer.
Even though New Yorkers are already the most heavily burdened taxpayers of any state in the nation.
No wonder so many businesses and residents are looking to locate in other states, as recent Census data show. How many times, after all, can they be ordered to make up for the shortfall of others?
Most astounding about Silver’s plan, though, is that it not only seeks to hold harmless those who take on more than they can handle, but it also essentially legitimizes that practice – by doing the same thing itself.
We repeat: There’s no money to fund it. And when asked about this wee oversight, Silver gave the classic response of those who can’t say no: The state would just have to find the money, he said, for the 50,000 households “in some state of foreclosure” – just as it does for cops and other key public servants. (That is, the financially responsible other 19 million New Yorkers will have to pony up.)
“We have to be creative,” said Banking Committee Chairman Darryl Towns, in trying to close the budget gap. But “this is one of our priorities.”
Again, even if there were billions on hand, Silver’s bailout is terribly ill-conceived. While he lets deadbeat borrowers off the hook (they’re “victims,” you see), he calls lenders “unscrupulous,” demanding they “pick up their share of the tab.”
The fact is that many lenders (investors, actually) – who hold bad mortgages – stand to lose a fortune, as their collateral turns out to have been wildly overvalued.
No bailout for them – right, Mr. Speaker? Of course not.
Never mind that many of the lenders may have been misled by the borrowers themselves – particularly in cases where mortgages required no document or income verification.
Indeed, law-enforcement agencies say mortgage fraud – including false statements by borrowers on applications – has doubled since 2005 and soared eight-fold since 2000.
Never mind that when lenders tighten their standards, folks like Silver hold them up as villains for impeding upward mobility and home ownership.
But the misguided thinking and squeezing of taxpayers is secondary.
The main point, as Silver well knows: There’s just no money in the kitty.
And even if there were, this isn’t a proper way to spend it.