W's sub-prime bailout plan disaster

Four points from City Journal’s Nicole Gelinas in the NY Post:

[1] It's a mass-scale payment from city and state taxpayers to banks and big investors - institutions that should have known they risked a huge loss from lending on such an unsustainable basis.

[2] By encouraging people to stay in homes they can't afford, the plan keeps the housing market artificially high. When a bank forecloses on a home, conversely, someone else can buy it at a much cheaper price.

[3] The Bush plan encourages foolish local-level borrowing. City and state have limited funds; they should raise bonds only for crucial capital projects, like building and fixing roads, bridges, tunnels, schools and subway systems. Any money the government raises to bail out a homeowner who made a bad decision is money taken directly from fixing a pothole-scarred road or an aging bridge.

[4] Encouraging city and state governments to guarantee new mortgages for precarious borrowers puts the credit ratings of those governments at grave risk.