There’s a suggestion by two econonomists in the Washington Post that instead of bailing out the well-connected on Wall Street, the government should bail out individual American homeowners:

The Trickle-Up Bailout

By Jonathan G.S. Koppell and William N. Goetzmann
Wednesday, October 1, 2008; Page A17

The theory underlying the bailout plan stalled in Congress is that rescuing the finance industry will restore market stability and that the benefits will eventually trickle down to average Americans. Thus, solving the subprime mortgage crisis has morphed into a much larger challenge: reassembling the architecture of the financial markets, which seemingly requires giving the Treasury secretary nearly a trillion dollars and extraordinary latitude to pick winners and losers.

There is an easier and more politically palatable fix: Pay off all the delinquent mortgages. [More]

Of course, this would have its own problems, but of course it would provide an opportunity for Congress to limit it to individual American homeowners, and specifically exclude bailing out illegal alien homeowners.

Remember, Fannie, Freddie, and all the banks were explicitly marketing mortgages to illegal aliens, who they said were “good risks.”

I pointed this out in 2002, in an article called Why Not Just Give Them A Roomful Of Gold? Or: Immigration - Just Another Government Program. (Excuse my mentioning it–we’re holding “I Told You So Week “ at VDARE.com.) And Congress, especially the Republicans in Congress, could insist that in a homeowner bailout, no one should be bailed out except those people who were in the country legally. That would not only save some American taxpayer dollars, it would give us some idea of the size of the illegal alien mortgage default problem.

And of course, the illegal alien homebuyers wouldn’t necessarily suffer. They could still be bailed out–by the Government of Mexico.

Immigration has turned back the clock on the rights of women and girls in Britain.

The disclosure comes as official figures show that nearly 60 children aged 15 or under have been rescued by the Government’s Forced Marriage Unit in the past four years. The cases are feared to be the tip of the iceberg. They will fuel concerns, first raised earlier this year, that large numbers of children are disappearing from British schools to be forced into wedlock overseas. A charity which runs a national helpline on forced marriage and “honour”-based crimes, Karma Nirvana, revealed that in one incident a nine-year-old girl from a Pakistani family in the east Midlands was taken into council care after her parents told her she was to wed. Jasvinder Sanghera, director of Karma Nirvana, said that on average four children a month aged under 16 have contacted its helpline since it launched in April.[Nine-year-old Midlands girl rescued from forced marriage, By David Barrett, Telegraph, September 28, 2008]

One of the problems we’ve all had in discussing the racial angle of the mortgage meltdown is the lack of good data.

Since writing that fairly comprehensive article on Saturday, I’ve also found some seemingly trustworthy statistics on recent subprime loans by ethnicity. (Unfortunately, nobody seems to have calculated defaults by ethnicity. Perhaps nobody wants to know?)

We do know that defaults are closely tied to subprime loans. The most toxic of all, adjustable rate mortgage (ARM) subprime loans, accounted in early 2008 for only six percent of all loans outstanding but 39 percent of foreclosures started. Fixed and adjustable subprimes account for only 12 percent of loans outstanding, but half of current foreclosures. The subprime share of new lending roughly doubled from 2003 to 2004 and increased again in 2005. So far, that’s where most of the “unexpected” defaults have come from, although the default contagion will likely spread to lower interest rate adjustable rate mortgages in the near future.

Compliance Tech, a firm that helps lenders “Manage Diverse Lending Markets,” estimates that in 2004-2006, minorities accounted for 44 percent of all subprime loans, with Hispanics slightly outnumbering blacks.

The numbers we really want, though, are defaults, dollar value of defaults, and incremental dollar values of defaults over expected levels.

Minorities with subprime loans probably have higher default rates than whites with subprime loans. For example, default rates on college loans are about five times higher for blacks, and more than two times higher for Hispanics, than they are for whites. (Asians are best of all at paying back college loans.) Normally, college loans are handed out more willy-nilly than mortgages, so the ethnic default rate gaps likely aren’t as big in mortgages, but willy-nilly pretty much describes 2004-2006 mortgage lending in some markets.

On the other hand, they likely tend to have lower value mortgages. On the other other hand, many Hispanics are found in expensive states, especially California, epicenter of the crisis. The largest defaults in America as measured in dollar losses (number of defaults times size) appear to have come out of California’s exurban fringe: the Inland Empire, Antelope Valley, and the Central Valley. All these areas tend to have mixed white and Hispanic populations