New Poll Finds Americans Skeptical over Proposals to Rescue Subprime Borrowers
Alexandria, Va. – Dec 4, 2007 – As the Bush administration huddles with major lenders to finalize a relief plan for subprime borrowers, new results today from a survey conducted by Harris Interactive® on behalf of the National Taxpayers Union (NTU) warn against the government going too far. Almost half (48%) of U.S. adults aged 18 and older think a federal bailout of the subprime market would help either lenders who issue subprime mortgages or Wall Street banks who profit from subprime mortgages; in contrast, roughly a quarter (26%) believe homeowners who hold subprime mortgages would benefit most.
“When it comes to rescuing the subprime mortgage market, Americans are skeptical not only of who will benefit, but who will be left holding the bag,” said NTU Vice President for Policy & Communications Pete Sepp. “While other surveys have shown serious public concerns over rising mortgage defaults, this poll demonstrates Americans have equally serious reservations over government involvement in the solution.”
From the S&L crisis of the 1980s through the recent scandals at Fannie Mae and Freddie Mac, NTU has opposed government schemes that would put taxpayers on the hook for financial institutions’ missteps. Recently Congress and the Bush administration have crafted proposals to ease subprime woes, such as allowing the federal government to buy shaky loans and creating a “superfund” that states could use to bail out borrowers or lenders. NTU, which opposes such radical steps, commissioned the survey in order to gauge public attitudes toward subprime rescue packages. Among the findings:
- When asked which statement most closely reflects their views on plans allowing federal agencies to “increase the size of the loans they can insure and purchase, and to reduce down-payment requirements,” 66% of respondents agreed that “these proposals are nothing more than a taxpayer-funded bailout of mortgage lenders and banks that provided and profited from these risky loans.” Thirty-four percent believed “a taxpayer-backed refinance program is necessary to avoid an increase in foreclosures that could reduce home values across the country.”
- Sixty percent of respondents said taxpayers would be most negatively affected if the government were to “bail out the subprime mortgage market.” Much smaller numbers felt that “homeowners who hold subprime mortgages” (5%), “lenders who issue subprime mortgages” (5%), or “Wall Street banks who profit from subprime mortgages” (5%) would be most negatively affected.
- When asked who would benefit most from a bailout, 30% of respondents identified lenders who issue subprime mortgages, 18% said Wall Street banks who profit from subprime mortgages, while just 26% cited homeowners as the main beneficiaries.
- Participants were then asked about proposals for taxpayer funding “to subsidize mortgage payments, or subsidize the cost of refinancing subprime loans.” Forty-five percent indicated they strongly or somewhat opposed such a plan, while only 29% indicated they strongly/somewhat supported it, and 12% indicated they didn’t know or were not sure.
“The low levels of trust in government reported in other polls, along with the results of our poll, seem to suggest that policymakers may want to minimize the government’s role in any rescue packages being crafted with the lending industry,” Sepp concluded.
Harris Interactive® fielded the study on behalf of NTU from November 26-28, 2007 via its QuickQuerySM online omnibus service among 2,058 U.S. adults aged 18 years and older. No estimates of theoretical sampling error can be calculated. Note: a full methodology*, along with a graphic presentation of the poll results, is available at www.ntu.org or www.subprimenewsroom.com.