The Messenger-Post
has a story on Randy Kuhl's support of
HR 4627, a bill that would allow interest-free withdrawals from 401(k) plans to pay for mortgages. While Kuhl thinks it's a good idea, a financial planner quoted in the story says that it's never a right to take money out of retirement plans.
Far be it from me to question the wisdom of a financial planner, but this bill makes sense to me. There are a few circumstances, such as someone with good job prospects who's temporarily out of work, where a making mortgage payments from a retirement plan is a good strategy. Unfortunately, there are many other situations where the bill will allow homeowners to double down when they should be cutting their losses.
In the end, this and other efforts to blunt the impact of the mortgage crisis can't really do much, because the risk of rewarding speculators far outweighs the benefit of rescuing a few legitimate victims. If the mortgage crisis ends in a bailout, it will engender a new, larger bubble fueled by speculators assuming that government will swoop in to rescue them if the market goes south. Of course, it isn't politic to point that out, so Kuhl and other politicians will continue to trot out band-aids like this one as the recession deepens.