Thursday, August 5, 2010

August Surprise?

James Pethokoukis reports:
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.
He adds:
What is happening is that the president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.

5 comments:

Anonymous said...

This infuriates me, and it will infuriate most Americans who will be on the hook for this.

I am "struggling" to pay for a home that I cannot sell, and I am not under water on it. I should not be expected to help pay for the neighbor's much larger, much nicer, newer home just because he bought more than he could pay for.

This will back-fire.

Doug Reich said...

I think you are right about it back firing. It seems like they are floating this as a trial balloon to gauge public and market reaction. I find it hard to believe this will go over well politically.

Anonymous said...

Politicians are so generous.

Anonymous said...

Over at http://blog.westandfirm.org/ check out the great interview with Peter Schiff. I live in California where some of us are celebrating equal rights for homosexual unions. Though I am a married heterosexual female, I applaud the upholding of equal rights for all, and limited government. It is striking, though, that many who celebrate this verdict are the same who believe it is ok for the majority to vote to hijack our paychecks and our healthcare and just about everything else in this life. It's a bitter irony. And Peter Schiff alludes to this nicely in this brief interview--most of what the US government does is unconstitutional.

*sigh*

Anonymous said...

"Democrats are in real danger of losing the House..."

Am I the only one who found that freaking hilarious?

-TM