Pres. Obama’s $75 billion Housing Rescue Plan is government bailing out homeowners and interjecting itself into loan modification negotiations between loaner and borrower. Propping up housing prices by bailing out foreclosees, is just government meddling in the marketplace, and therefore, won’t work.

So if a borrower can pay $1,000 per month but the bank will only modify the existing mortgage down to $1,500 per month, the feds will come in and donate the $500 difference. But this amounts to a price control, a price floor on home values. And economics teaches us that price controls, whether price floors or price caps, shrink the overall economic pie by misallocating resources. This is economics 101. Thoughtful people should always oppose price controls on principle because they make us poorer.

Contrary to popular belief, the cause of the current housing crises is big government and overregulation. The Federal Reserve artificially holds down interest rates. This subsidizes more loans than the market would naturally bear if the Federal Reserve Bank were not there. The federal Community Reinvestment Act, required bankers to give risky loans to seek a good federal rating.

These two things are examples of how government regulation and meddling, just artificially subsidizes risk and over-loaning causing housing bubbles and their corresponding bursts.

Let foreclosures happen and housing values drop, and let people move into rental housing and then let the rental market flourish as the market corrects itself. Prices need to freely fluctuate—even to obscenely low points—for the free market to work. Re-regulating only throws gas on the fire of this recession prolonging it.

Jeff E. Jared, Kirkland