Remember Rick Santelli's rant...

...from February, 2009? It may have set the entire tea party movement in motion (with a little help from former Republican House Leader Dick Armey and Fox News).

(Full disclosure: I used to work with Rick at Sanwa Futures. He's a good guy, although a little ... odd.)

Santelli's rant followed news that the Obama administration was considering mortgage relief for individuals. (Kind of like TARP, which bailed out over-leveraged banks; this was intended for over-leveraged consumers. It was all in an effort to avoid an economic collapse.) 

Rick's rant (which was straight out of Ayn Rand) complained that the "government is promoting bad behavior" by "subsidizing the losers' mortgages."

(Full disclosure: I don't have a mortgage, but I do own a house. A family down the street sold theirs in the last year at a fire-sale price -- not good for the neighborhood.)

In today's Times -- almost three years after Santelli's rant -- Martin Feldstein, a Republican economist from the (Saint) Reagan administration, writes "How to Stop the Drop in Home Values" (my emphasis):

But for political reasons, both the Obama administration and Republican leaders in Congress have resisted the only real solution: permanently reducing the mortgage debt hanging over America. The resistance is understandable. Voters don’t want their tax dollars used to help some homeowners who could afford to pay their mortgages but choose not to because they can default instead, and simply walk away. And voters don’t want to provide any more help to the banks that made loans that have gone sour.

But failure to act means that further declines in home prices will continue, preventing the rise in consumer spending needed for recovery. As costly as it will be to permanently write down mortgages, it will be even costlier to do nothing and run the risk of another recession.
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I cannot agree with those who say we should just let house prices continue to fall until they stop by themselves. Although some forest fires are allowed to burn out naturally, no one lets those fires continue to burn when they threaten residential neighborhoods. The fall in house prices is not just a decline in wealth but a decline that depresses consumer spending, making the economy weaker and the loss of jobs much greater. We all have a stake in preventing that.