Keeping the dream alive

Welfare queens are off the hook! Up next as a false image Americans can malign is the inveigling home buyer who overreached for their McMansion and now await a $700 billion bailout by taxpayers.

Most of us can work up an angry froth thinking about people who snapped up houses way nicer than you or I will get to live in with little money down and little proof they could afford the mortgage. Entered as evidence is the occasional empty house in a neighborhood from which we speculate Mr. and Mrs. Inveigler absconded in the middle of the night, leaving the rest of us with a structural eyesore declining in value by the minute.

Easy to say no then to a bailout while proclaiming experience as the best teacher for poor choices.

But just as Americans eventually learned that mothers on welfare weren't spending our tax dollars on Cadillacs and fast food, we'll eventually reject the greedy homebuyer as another urban myth.

A fair debate can be had about whether the current economic crisis was the nexus of lax regulations and a long-standing public-policy shift toward broadening homeownership. Banks are in the business of lending money. Mix in some breathtaking greed, and loan packages that read like a Dr. Seuss poem come about. And yes, some people will look back and acknowledge they bit off more than they could chew.

But talking to the people around us, those on the bus or strolling the neighborhood will underscore that more people did right than wrong. More took out home-equity loans to send the kids to college or build an addition than did to buy a brand-new Mercedes.

Looking around Seattle and the Eastside, one has to be grateful that our housing bubble burst but didn't implode as in Nevada or Florida. Even without Foreclosure R' Us signs dotting the Puget Sound landscape, we should still support a federal rescue. Without it, our home values continue their descent and with them go plans for retirement, college tuition minus loans and other dreams.

This bailout is as much for Main Street as it is for Wall Street.

For us, traditional lenders need to rebuild their capital so they're willing to make more loans to the people who need them — not those in foreclosure, but those who need to refinance or sell. They are frozen in time.

Few can get a mortgage above $450,000. Try buying a house for that amount — nothing fancy — in a good neighborhood, say Wallingford or the least-chic street on Queen Anne. Or try getting a home-equity loan to replace antiquated pipes or a sagging roof. You've got a better chance of seeing Sasquatch on your way home. For a vibrant, attractive region like ours, a frozen lending industry is the death knell.

The two presidential candidates, running neck and neck in key states such as Florida, Ohio and Missouri, are talking about this. Sen. Barack Obama makes the most sense with a two-part plan starting with a bailout and involving significant accountability measures and taxpayer protections. Sen. John McCain wants someone fired.

In Congress, Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., are leading efforts to fine-tune President Bush's bailout package by the end of the week.

Dodd, chair of the Senate Banking Committee, is adding policies to the bailout plan that ought to help me and my neighbors. Dodd's counterproposal includes foreclosure assistance and limits on executive pay packages. Help for the average homeowner and limits on profiteering from this disaster are both good things.

After this, we've got to get out of the blame game. Our economy is based on the flow of money, so we ought to cheer every time someone buys or sells. Real estate will hopefully return as a sound investment, not one to be maligned.

Let's face it, real estate was one of the remaining ways to get a toehold in a global economy. As traditional pensions turned into 401(k) accounts that rose and fell with the stocks and bond market, real estate became a better alternative to build a nest egg for retirement. The $50,000 to $100,000 required for four years of college tuition could be more easily found in a home's value than in a savings account.

The American dream was built on real estate. From former President Ronald Reagan onward, economic policies have supported and expanded homeownership as a fulfillment of the dream. Congress has a choice: Rescue the economy or tell Americans to heck with their dream.

Lynne K. Varner's column appears regularly on editorial pages of The Times. Her e-mail address is lvarner@seattletimes.com; for a podcast Q&A with the author, go to www.seattletimes.com/edcetera