There is a key sequence of scenes in “The Godfather: Part II” in which a young Vito Corleone exerts his ascending power and influence over New York’s Little Italy neighborhood. A poor widow named Signora Colombo asks Corleone to intervene with her landlord, Roberto, who wants to evict her. Colombo cannot afford to move, and she has no where else to live.

Corleone seeks out the landlord Roberto and offers to pay six months of Signora Colombo’s rent in advance, at an increased rate. Roberto refuses, but soon finds out that Vito Corleone is not a man given to negotiation. A trembling Roberto then visits Corleone and says that Signora Colombo can not only stay in her home, but he will greatly reduce her monthly rent. Roberto leaves, and Corleone’s friend Genco declares, “God Bless America. We’re gonna make a big business.”

The Democratic presidential candidates see today’s Signora Colombos – families who defaulted on adjustable rate, sub-prime mortgages they could not afford – just as Corleone saw the poor widow – as helpless perdente, manipulated by others, who could not survive the mean streets without the helping hand of Don Vito Government.

On August 7, Sen. Hillary Clinton announced her detailed plan to “address mortgage lending abuses.” Clinton’s press statement, found on her web site, begins, “With foreclosure rates continuing to skyrocket across the country, Senator Hillary Clinton . . . laid out a plan to preserve the American dream of home ownership that would crack down on unscrupulous brokers, curb mortgage-lending abuses, assist families facing foreclosure and expand affordable housing options.”

The concept of borrower responsibility is obviously lost on Clinton. She then cites the plight of her own Signora Colombo, a woman named Kristi Schofield. Kristi and her husband can no longer afford to live in their home, because their adjustable-rate mortgage payments grew from $2,400 to $6,000 per month.

Signora Schofield said, “We tried to do the right thing and continued to make the payments as long as we could with our savings and what earnings we had from unemployment, temporary and part-time work.”

Schofield added, “Hillary Clinton is standing up today because she wants to help protect the American dream.”

In truth, Clinton’s plan would heap onerous and needless new regulations on the mortgage industry and establish a $1 billion housing trust fund to help “at-risk borrowers avoid foreclosure.” In other words, Clinton’s plan requires responsible taxpayers to subsidize the mortgage payments of deadbeats unable to comprehend the concept of adjustable mortgage rates.

Worse, if Clinton’s plan and similar plans touted by her Democratic opponents were to become law, the element of risk in borrowing and investing capital would disappear. If borrowers and investors incur no risk due to federally subsidized payments, nothing would stop lenders from inflating their home mortgage rates far beyond market-established values. Government subsidies have already distorted the free market and raised costs through agriculture, college tuition and health care programs. 

An August 7 Wall Street Journal article that details the credit and mortgage situation quoted former Federal Reserve Chairman Alan Greenspan, who said, “These adverse periods are very painful, but they’re inevitable if we choose to maintain a system in which people are free to take risks, a necessary condition for maximum sustainable economic growth.”

Preach about it, Mr. Greenspan. The ability to risk money in the various investment markets, in startup businesses, in research and development of new products or in a family home fuels our nation’s turbocharged economic engine. These invested dollars, in turn, produce individual wealth for the risk takers, new consumer products and new jobs.

Contrary to Clinton’s pontifications, the American Dream is not to have the federal government make your house payment. The American Dream involves creating and acquiring enough wealth to make your own house payment, own your own retirement plan and have adequate remaining resources for both necessities and recreation.

Not surprisingly, the media and liberals have grossly overstated the so-called mortgage crisis. 

Economist Jerry Bowyer, writing in National Review, found that just 0.6 percent, or 254,000, of the 44 million mortgages in the U.S. are currently in foreclosure. Additionally, the breathlessly reported sub-prime meltdown has caused an increase of only 35,000 mortgage foreclosures in the last quarter.

Thirty-five thousand homes in foreclosure is not a skyrocket. It’s a suburb.

A new study by the National Assessment of Educational Progress found that just 33 percent of high school seniors could explain the effect of an increase in interest rates on consumer borrowing. America’s Signora Schofields do not need a mortgage bailout. They need a lesson in finance.

Without a national crash course in economics, finance and personal responsibility, Ronald Reagan’s Shining City on The Hill could soon become Hillary Clinton’s Cosa Nostra.

Can’t pay your mortgage? Fugetaboutit.

Source: North Star Writers Group