Housing bill a costly rescue

Banking bailout will help many, but will hit taxpayers hard
 

It's no coincidence that Congress, in passing an omnibus housing bill last week, simultaneously raised the federal debt limit by $800 billion to a nearly unimaginable $10.6 trillion.

That's 14 digits — as in $10,600,000,000,000 — of obligation this generation is foisting on its children, grandchildren and great-grandchildren.

Why a higher debt ceiling? Because there is no firm price tag on the legislation, the heart of which is taxpayer-paid support for hundreds of thousands of homeowners facing foreclosure. It's open-ended because there's no way to tell at this point how deep the housing crisis will go.

The foreclosure wave may have crested — signs in the market indicate as much — but that doesn't mean that many more lenders and borrowers than are helped in this bill won't come calling on Congress again, probably when a new administration, with new sensibilities, takes office.

President Bush, his successor and Congress must stick to some core principles as the bailout pressure builds: Lenders and borrowers who walked knowingly into their woes must for the most part find their own way out, and tough new regulations on lending disclosures and practices must be stern enough to forestall future efforts to weaken them.

Lenders rightfully don't get a free ride under this legislation. Along with taxpayer-financed mortgage backing, banks will have to forgive billions in loans if foreclosures are to be avoided. Most will be willing to step up. But taxpayers could be asked to cover for those institutions that won't or can't.

If the bailout rights the upended credit markets, it will be remembered as a success. If it protects against market misbehavior, it will be judged kindly.

If it's no more than a dressed-up, hugely expensive bailout, then coming generations will have reason to complain.