A Cup Of Cold Tea

BLOG VIEW: It is impossible to tap into any U.S. news outlet without encountering the in-your-face shenanigans of the Tea Party movement. Not unlike many bad ideas that spun seriously out of control, the Tea Party is overplaying its hand, and even the most sympathetic viewer will have to admit that the movement is all anger and no answers. For mortgage bankers, however, the noise should be unsettling.

The Tea Party effort is unusual because it is not seeking to establish a third national political party to break the legislative deadlocks. That mission never works, as proven over the years by the likes of Theodore Roosevelt, Norman Thomas, George Wallace and Ross Perot.

Instead, the Tea Party is trying to force its brand of far-right political thought on the Republican Party. As a result, Republicans who are seen as moderate or centrist are being called to task – and in the case of Arizona and Florida, expensive and bitterly divisive senatorial primaries are being held in an effort to drive the party further to the right.

The keystone of the Tea Party efforts is to roll back government spending and government involvement in a very few key areas. The movement had its groundswell with last year's healthcare reform debate, and it has since expanded its view to consider the government bailout of the financial services industry. The latter issue, however, provides a lose-lose situation for both the Tea Party and the Republican political establishment it is trying to influence.

In Congress, the Republicans initially announced that they would stand united against the proposed financial services regulatory reform being pushed by the White House and the Democrats. That is no surprise – bipartisanship is not in fashion at the moment, and the Republicans have no leverage on the issue outside of appearing to be obstinate.

But the administration's decision to file fraud charges against Goldman Sachs in the midst of this debate adds a new flavor. If the Republicans in Congress argue against financial regulatory reform, they run the risk of being seen as too supportive of Wall Street rather than Main Street. I would love to see the Republican leadership making an argument that not putting regulatory reform on Wall Street is good for the country.

But if the Republicans come on board in the spirit of bipartisanship (which seems possible, given the hints coming forth in the past few days), the Tea Party extremists will charge them as collaborators who betrayed their principles to work with the administration, which the Tea Party followers have equated with socialism, communism and Nazism.

Arizona's Sen. John McCain found this out the hard way – he has been trying to distance himself from his support of the 2008 bailouts once the issue was used against him in his ongoing primary race against a Tea Party-favored opponent.

What does this mean to mortgage bankers? For starters, the Tea Party doesn't appear to have an answer to the puzzle of the government-sponsored enterprises. The movement's anti-government philosophy might suggest that it does not want to see Fannie Mae and Freddie Mac remain in federal conservatorship. But where is the movement's solution to getting Washington out of the secondary market and revitalizing the private-label market?

And what about the rising number of foreclosures and delinquencies among homeowners? Does the Tea Party favor loan modifications, either from the mortgage banking industry or through federal intervention? Or, is it in favor of taking private enteprise to the extreme by kicking financially challenged people out of their homes without making any effort to provide an equitable solution to the crisis – even though such solutions are being driven, in large part, by federal intervention?

It appears that the Tea Party's mantra involves the hoary old chant to cut taxes. As we've seen too often, that sounds great on a campaign trail and is utterly disastrous when put into practice while trying to balance a government budget. That is a soundbite, not a solution.

A great deal of the news coverage relating to the Tea Party rallies points out the alleged agitation among those who heed the movement's call. But in the midst of the supposed fury and frustration, it wouldn't be such a bad idea if the movement's leaders tried to offer a well-considered policy on where to take the economy. When the Tea Party can accomplish that, it can finally become a genuine force in reshaping the national policy landscape, instead of being an obnoxious distraction.

– Phil Hall, editor, [b][i]Secondary Marketing Executive[/i][/b]

[i] (Please address all comments regarding this opinion column to hallp@sme-online.com.)[/i]


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