More Mortgage Bailouts

The federal government continues to throw good money after bad, with a fresh $600m commitment to unemployed people in five states that are behind on their mortgages.

"The Obama administration plans to send $600 million to help unemployed homeowners avoid foreclosure in five states.

The Treasury Department says mortgage-assistance proposals submitted by North Carolina, Ohio, Oregon, Rhode Island and South Carolina received approval. The states estimate their efforts could help up to 50,000 homeowners.

The administration is directing $2.1 billion from its existing $75 billion mortgage assistance program to a total of 10 states. Each state designed its own plan.

Treasury approved money in June for Arizona, California, Florida, Michigan and Nevada."

It's unclear why the federal money is only designated for 10 states. Surely the housing market has also fallen in states other than those identified above. It can't simply be that the remaining 40 states never applied for assistance; if there's free money out there, people will find it. It's actually more likely that the government is playing politics, and using federal money to win over voters in key states.

The key question though is whether this bailout is a proper use of taxpayer money. The housing market is falling because of oversupply and because prices got out of control. Letting the market fix the excesses that were created in years past is the healthy and normal way to fix the problem, without any unnecessary government intervention.

Unemployed workers are already given generous benefits for being idle, in many cases encouraging them to remain idle far beyond when they would otherwise be able to return to the work force.

Let's not give them free money for the purpose of keeping them in a house that in many cases they should be looking to sell in order to get out of a burdensome mortgage liability.