A recent article from http://www.thedeal.com/newsweekly/features/say-a-little-prayer.php talks about how many Churches around the nation have been failing to pay their mortgages, something that seems particularly important given the new government bailout plan for the top lenders in the nation. "Many churches live on the edge, especially those independent of larger denominations. With few exceptions, "income" depends on congregant donations," Matt Miller writes, "hard times, demographic changes, ambitious expansion, even loss of faith in the minister have created financial peril." With the economy in shambles, people have become more careful about their spending habits. Many churches, like Upper Room, are filled with “"normal, hardworking people making enough to get by," a group that may find it difficult to put much into the plate on Sunday morning.
What are the implications of this? If the government bails out these lenders who hold the mortgages for churches, is there a conflict of the first amendment? Should the government buy all of the mortgages except for the mortgages for churches? Would the government owning churches across the nation violate the establishment clause? It seems that the government could foreclose whenever they deemed appropriate, but could personal religious affiliation or bias creep into those decisions? It is difficult to answer many of these question while so many details are left up in the air, but this is an important issue that will need to be addressed sooner than later. Imagine the outcry if the government foreclosed on a Mosque, a Synagogue, or a Kingdom Hall but avoided foreclosing on a Baptist, Methodist, or independent evangelical church.
It seems to me that the government has its hands tied in this matter. How could they possibly bail out lenders without bailing out all of the mortgages? If the government doesn’t bail out the lenders, on the other hand, we could have a housing crash and the economy could tank further than it already has. I don’t claim to be an economic genius, but the foreclosure of millions of homes can’t be good for the bottom line. Whether or not churches will bring a case to court if/when the government is forced to foreclose is yet to be seen, but if that problem does arise I can imagine a decision in which the court decides that governments cannot own the interest on churches. While this wouldn’t impede upon free exercise, it definitely skirts the issue of establishment. At what point does the government have too much control over the actions of the church? What type of decisions can be made by the government regarded whether a church should remain open or not. I think these are serious issues that some thought should be given too. I don’t claim to have a concrete grasp on first amendment issues and I welcome suggestions about how this scenario could play out. It is an interesting thought that the government would be holding the mortgage of thousands of churches, and I believe that if it happens, some type of case would be brought sooner than later.
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I think there is a fundamental misunderstanding here. The $700 B plan, if it actually takes place, will be to buy up mortgage-backed securities. What this means is that somebody can buy a security backed by a collection of mortgages, and in good times that security would retain its value and pay a certain yield. However, if mortgages that back the security fail (debtors default), then the security loses value, which is what's happening right now.
When the government buys these securities, they are not bailing out individuals or organizations who are paying off a mortgage -- the house you or I just took out a mortgage on last year isn't going to be paid off. What is happening is that the government is buying up these worthless/severely depreciated mortgage-backed securities, which are owned mostly by large institutions or investors.
Since the government isn't doing any foreclosing, and it's not actually giving any money to the churches (unless the church is investing in mortgages...?), there isn't any conflict with the first amendment.
In my opinion the government should buy up all the mortgages including those from the churches because in this scenario the churches are acting as finanial institutions not as houses of worship. The lenders who gave these mortgages to churches saw the financial benefit, not the spiritual benefit, of having these institutions as clients.
I believe that intention also plays a major role here. The government did not intend to buy up the mortgages of these churches; rather, the economic downtown prompted the government to take such action, not just for churches but for other institutions as well. In this case, financial insolvency is a public concern not a private one. Hence, the government is safe to step-in without worrying about violating the establishment clause.
If the government decides not to take up church mortgages, then there would be an issue with the first amendment because the government is financially negating the existence of these churches.
While the original post demonstrates an incomplete understanding of the current credit crisis, I think it brings up interesting legal questions concerning the powers of the United States government. Earlier this month, Fannie Mae and Freddie Mac were brought under federal conservatorship-- essentially, the government now owns a majority stake in both lenders. Fannie Mae and Freddie Mac are the companies that buy and sell the mortgages of home and commercial real estate properties. David already clarified that the Troubled Asset Relief Program (TARP,) is not aimed at bailing out the top lenders-- it is instead bailing out the investment banks and financial institutions who purchased the mortgage backed securities from Freddie Mac and Fannie Mae (the lenders.) It is important to note that the "government bailout plan for the top lenders" already happened almost a month ago-- with the conservatorship of Freddie and Fannie. The government now owns (again-- Fannie Mae started in 1938 as a government sponsored enterprise as part of New Deal legislation and was spun off as a private entity in 1968) the companies that buy, sell, and guarantee the mortgages of churches and other religious organizations. If we are going to argue against the state's financial involvement with religious institutions, we should be debating the New Deal and the creation of Fannie Mae, not the current consideration of the government's purchase of troubled assets.
Even though the government has bailed out both the lenders and is proposing to bail out their business partners, the investment banks, the Treasury has proposed nothing which benefits particular religious groups. If Freddie Mac and Fannie Mae were left to fail, the mortgage market in this country would fail, and people, businesses, and organizations would literally be unable to secure a mortgage to purchase property. This "bailout" has nothing to do with the owners of the mortgages, only with the institutions that have bought and repackaged the debt from these contracts.
I certainly don't understand economics, but I agree with Gabriela that, as far as the first amendment and establishment clause, the government would have to support all religious institutions. Even though, I don't think bias toward one church would be blatant, I think Johnny is right to question the possibility of leaders favoring one place of worship over another, because bias is prevalent throughout politics, just in the nature of favoring your constituency over the opponent's. Yet, given the high tensions of inappropriate uses of religion in politics, many Americans would not stand for any bias toward place of worship over another and ideally would hold the government accountable.
Ditto on the Bailout Plan, it concerns the buying up of liabilities. The main problem with the buy out is that it doesn't help the individuals who were, in my opinion, dupped by the credit companies in hopes of major, more than realistic, returns on investments. The problem is that in the author's perceived bailout plan, which seems to have been suggested by paul kruger and which I support, is that the government might have the ability to forclose on certain churches without any check. This seems to be supported, though, by Braunfield v. Brown, in which the supreme court ruled that indirect burdens would not suffice as violations of the first amendment. The fact that the government might buy these mortgages to save an economy seems to be an indirect burden on these churches. However, we don't need to worry because the churches are not going to be affected by the buy out because they're not being bailed out. The bail out goes to the CEO's and companies that decided to gamble on poor credit.
I feel that the government should buy the mortgages from churches, but there is going to be problems with that because no matter how hard the government tries there will be more Catholic, Protestant, Evangelical, and so on churches bought. This is not the fault of the government, it is the fact that there are more of these types of churches in the United States. I feel that the first amendment could be at stake to be in question if the governmen only bought certain types of houses of worship, but as long as there is a fair ratio of these being bought, I do not find there to be a problem. There is no way to say that for every Catholic church bought a Mosque should be bought, but based on numbers I do not pretend to know, a fair ratio could be found as to not disrupt or bring into question the first amendment.
I think that David and Bennet G's posts complement Johnny’s post well in explanation of the current crisis and the origination of Freddie Mac and Fannie Mae and would encourage you all to read them. The FRE and FNM demise is significant for one reason, EVERYONE is affected! A church, especially the type you are referring to Johnny, is a business. They sell a product (salvation, worship, whatever you want to call it) for a price (donations) out of an establishment that they are responsible for. Therefore, if they can’t keep up with the bills, they too should be foreclosed on without any preferential treatment. I don’t see how the current plan would constitute a First Amendment claim, but I could very easily anticipate some legal action if the government took this blanket program one step further in directly assisting on an individual basis, but I don’t really see that happening. The church would allow a bank to foreclose and therefore must allow the people in charge of that lender to make the call- regardless of who it is. On the flip-side, if the government starts aiding religious establishments of any kind, I believe there will be an outcry from the public- it just not might be the general public. I see where you are coming from, I just don’t see the likelihood just yet.
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