"Free-Market Fundamentalism" Is an Invention of Progressives

Monday 14 June 2010

by: Dean Baker, t r u t h o u t | Op-Ed

The right showed once again that they have no allegiance whatsoever to the free market when House Republicans pushed through a bill that would prohibit the Federal Housing Authority (FHA) from insuring the mortgage of anyone who had "strategically defaulted" on an earlier mortgage. The intention was to punish people who had taken advantage of this option and, therefore, make it less likely that others would go this route in the future.

A strategic default is when a person stops paying a mortgage even when they can still afford it, and, instead, turns the house back to the lender. This can be a desirable move for borrowers if the price of the house has fallen below the value of the home due to the collapse of the housing bubble.