The New York Times?s Gretchen Morgenson proposed giving American mortgage borrowers and their lenders the same kind of financial bailout that New York City got 33 years ago.

Nicole Gelinas over at City Journal decided to poke a few holes in such a proposal, scarier still is that there are those that think it’s a good idea.

In 1975, as New York City began running out of cash to maintain public
services and pay its bondholders, the state government, along with the
city?s banks, real-estate titans, good-government groups, and elite
citizens, cobbled together a solution: use the state?s better credit
standing, as well as the city?s tax revenues, to refinance much of New
York?s unsustainable debt so that the city could recover without
eliminating vital services. A few months later, Washington abandoned
its position that a bailout would only discourage the city from getting
its house in order?FORD TO CITY: DROP DEAD had been the infamous Daily News
headline?and got on board with some guaranteed financing of its own.
?It worked,? writes Morgenson. ?A few years later, the budget was
balanced and New York was back on its feet. . . . There was a will to
do what was necessary in 1975 that is missing today.?

The left always returns to a government solution to solve perceived problems because it always sounds good.  But history has already taught us a lesson about this particular approach. 

 

After New York got its bailout, it didn?t return, chastened, to running
its own finances. In fact, it was never again allowed to have full
control over them. In 1975, the state set up a board and a special
financial-oversight office to watch the city?s budgets and borrowing
closely. Since then, the city?s elected officials have had to appear
before the board annually and present audited financial statements, as
well as clear evidence that the budget is balanced without resort to
gimmicks like short-term debt (which is now sharply curtailed). And
until last year, the board retained its right to seize day-to-day
management of the city?s budget if it determined that such action was
necessary. (State legislation to renew this provision is pending.) 

Her entire article is worth the read.