Bond Manager Says Don't Bail Out Subprime

You could, frankly, go further. Many other forgotten people rented during the real estate bubble. They wisely shunned the hype and refused to take on too much debt to buy a home they couldn't afford.

Where are they now?

If politicians jump on Gross' proposal, these people would be forced to pay higher taxes in order to save other, less prudent people from the alleged indignity... of having to rent.

Some will be forced to subsidize their own landlords. Fair?

As for the risks to the financial system, Atteberry points out that the federal government, via Fannie Mae(FNM Quote), Ginnie Mae and Freddie Mac(FRE Quote), already guarantees huge mounds of mortgages.

Pimco could not be reached Friday for comment.

Many politicians, looking for a scapegoat, are pointing the finger for the housing bust at "predatory lenders." Atteberry notes that the law already criminalizes such behavior. Any lender or broker who misled a borrower committed fraud.

He adds, though, that there is a second group to look at. Predatory ... borrowers. Any borrower who lied on a mortgage application, by inflating his or salary, say, or covering up a "soft second" mortgage, is also guilty of fraud.

Will the politicians go after those people too?

Don't hold your breath.