This commentary originally appeared in the Minneappolis Star Tribune Friday, June 13, 2008.
Explaining his veto of the Minnesota Subprime Borrower Relief Act of 2008, Gov. Tim Pawlenty referred to the contract clause of the U.S. Constitution -- Article I, Section 10, which declares that no state shall pass any law impairing the obligations of contracts. Criticizing the governor's veto, state Sen. Linda Higgins cited the Frank Capra film "It's a Wonderful Life" ("Channeling bankers, governor denies a happy ending," June 4)
Pawlenty did not mention "It's a Wonderful Life" in his veto message. Appropriately, Higgins did not mention the Constitution in her opinion piece. The governor correctly interpreted the spirit of the Constitution. Higgins didn't even get her metaphor right.
According to Higgins and the legislative sponsors, Sen. Ellen Anderson and Rep. Jim Davnie, the Subprime Borrower Relief Act might have averted foreclosure for 12,000 Minnesota families. It was meant to help homeowners who live in the homes they borrowed money for -- those "taken to the cleaners by predatory mortgage lenders and unscrupulous brokers backed and spurred on by the avarice of investors looking for excessive returns."
Higgins sees the governor's choice as simple as the black-and-white depiction of Capra's Bedford Falls: Pawlenty could be the good-hearted George Bailey and save the homes Minnesota families, or he could be the greedy and mean banker Mr. Potter and protect those who put those families' homes at risk. Higgins conveniently leaves out the colorized option: Pawlenty could be the governor he is and fulfill his elective duty of preserving the constitutional rule of law.
In the movie, George Bailey is a hero because he takes personal risks, physical and financial, to help his family and his neighbors. He uses his and his wife's honeymoon money -- not other people's money -- to help his neighbors save their homes. And when Mr. Potter (who is indeed a jerk) steals the money intended for bailing out the Building & Loan, it is in gratitude for George's selflessness that his neighbors voluntarily come to his aid. Coercion and police power is nowhere to be found.
As Higgins writes, "flash forward to the legislative session of 2008."
Anderson and Davnie are not risking their own finances. They are using the police power of the state to alter private and voluntary contracts and pass the cost of enforcement on to taxpayers and the consequences of contractual impairment onto those who provided funds in good faith. The question facing the governor was a fundamental, constitutional point of law, not a misconstrued movie metaphor.
If borrowers are victims of fraudulent actions, they have civil and criminal remedies available in law. But if they simply made bad deals or took out loans that they simply could not afford, why should creditors and investors, whatever their reasons for investing or their expectation of return, be denied the constitutional guarantee of sanctity of contract?
Essentially, Higgins is criticizing the governor for not violating the spirit of the Constitution -- for not breaking the supreme law of the land. She is criticizing him for not allowing one group of people, borrowers, to prosper at the coerced expense of another group, creditors. She is criticizing the governor for not violating the law for what she perceives as a good cause.
Pawlenty's veto was the right thing to do and was done for the right reason -- to "preserve, protect and defend the Constitution of the United States."
And when a Liberty Bell rings, it means a governor has earned his wings.
David Strom is president of the Minnesota Free Market Institute, whose stated mission is to advocate for "policy that limits government involvement in individual affairs and promotes competition and consumer choice."
This commentary originally appeared in the Minneappolis Star Tribune Friday, June 13, 2008.
