Barney Frank picks your neighbors

House Financial Services Committee Chairman Barney Frank told reporters today that he will introduce a bill on Wednesday to revise the giant federal bailout bill rammed through Congress a couple of months ago.

After the brief press conference, CNBC snagged Congressman Frank in the hallway and wired him up for a live interview to clarify a few points.

Most of the interview focused on Rep. Frank's proposal to ban bank executives from receiving bonuses or flying on private jets, but there was also this exchange with "Power Lunch" co-anchor Sue Herera:

Sue Herera: "Mr. Chairman, how do you anticipate the community lending aspect of this to work, there are those who would say that the government should not become a landowner and, um, basically administering homeownership, and there other others who say...."

Chairman Frank: W-Where are we, I don't know what you're talking about, what are you talking -- where are we becoming a homeowner in this?

Herera: In terms of community support. To buy up, money to go to municipalities....

Chairman Frank: Oh.

Herera: ...and communities to buy up foreclosed properties.

Chairman Frank: To buy up, like, property that was already foreclosed? The intention there is not for the municipalities to become landowners in perpetuity or even for a very long time, but to clear that inventory, to buy them and then make them available for other purposes, for workforce housing, for, uh, housing in some cases for the individual who lived there before, if that individual had been unfairly treated in the lending process, or to make them affordable housing. So, no, this is not to have the municipalities be the, uh, the longterm holders of the loans. I now have to go and vote on the floor."

With that, Chairman Frank took off the microphone and ended the interview.

Hey, Democrats, did you catch that?! Workforce housing? Affordable housing?

Chairman Frank is about to introduce a bill that would turn foreclosed homes into government housing for poor people!

Maybe right down the street from people who used to vote for you!

Don't send out the laundry!

No doubt when this proposal goes down in flames someone -- all right, everyone -- will claim that racial prejudice is behind the opposition to "economic integration" of neighborhoods.

But as it happens, there is a larger principle at stake: In a free society, goods are rationed by price, not by power.

Chairman Frank wants to use government power to give some people, and not others, an unearned benefit. He wants the government to give selected people a house they can't otherwise afford.

There are at least three categories of voters who will be rightfully angry about this:

-- People who worked, saved and diligently maintained good credit so they could live in the house next door, or one just like it.

-- People who can't afford to live in the house next door and resent the government reaching down below them on the economic scale to push some other family up and into that house.

-- People who believe they are equally entitled to a free house in a nice neighborhood and are angry that the government gave it to someone with more political pull.

Chairman Frank apparently believes he can use the fiscal emergency to get around the ever-present opposition to locating "affordable housing" in upscale neighborhoods. Lots of people who putter around in ivory towers think it is appalling that public housing is always clustered in rundown areas of the cities and believe society is best served by building affordable housing units in all neighborhoods, regardless of property values.

What do you think?

Do you think the government should use your tax dollars to buy foreclosed properties and turn them into "workforce housing" or "affordable housing" for selected poor people?

Why don't you give Chairman Frank a call? His number is (202) 225-5931. Or contact your representative in Congress at (202) 224-3121 (you can find your representative's name and direct phone number at www.House.gov).

Copyright 2009

Editor's note: You might be interested in the earlier post, "The unintended consequences of a terrible idea."

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