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Thread: Mortgage Bailout Bill about to come out of the closet ...

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    Banned Melonie's Avatar
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    Default Mortgage Bailout Bill about to come out of the closet ...

    (snip)"On March 17, the day after the Bear Stearns deal was announced, Dodd told reporters he believed there was now "a greater deal of receptivity to this idea" from the Fed and presidential administration than there was before the Bear Stearns bailout.

    The support for the mortgage bailout won't be as widespread as it was for the economic stimulus package, nor will it be enacted nearly as quickly as that bill, which went from early discussions to being signed into law in just about a month.

    "It's going to be a tougher sell, just because this is messy, complicated. Giving a tax rebate is simple," said Zandi. "But it may be just as important if not more important, to the economy."

    Where the administration stands

    The idea of mortgage lenders agreeing to cut the amount owed to them has already won support from the Office of Thrift Supervision, the agency which regulates savings and loans firms. Fed Chairman Ben Bernanke also said in a speech earlier this month to community bankers that he is in favor of such a plan.

    But neither the OTS nor Bernanke called for the FHA or other federal agency to take a direct role in negotiating new mortgages.

    The administration hasn't commented directly on the Dodd-Frank plan. But President Bush said Tuesday that if there needs to be further action taken to help the economy, the administration will take it.

    Treasury Secretary Henry Paulson expressed some caution Wednesday over some of the proposals now being floated by Democrats. But he said the administration is interested in finding solutions to help homeowners who can't afford mortgage payments that are resetting higher.

    Paulson also suggested the administration is looking for ways to deal with the Democratic-controlled Congress on the issue.

    "We will continue to pursue policies that strike the right balance: that do not slow the housing correction, yet also help avoid preventable foreclosures and unnecessary capital market turmoil," he said.

    What the presidential candidates think

    Sen. Barack Obama is one of the co-sponsors of Dodd's bill, and his rival for the Democratic nomination for president, Sen. Hillary Clinton, said she also supports it.

    However, Clinton proposed a step beyond his plan Monday. She suggested having the FHA become a temporary buyer of so-called "underwater mortgages" -- loans where the principal is now more than a home's value.

    Clinton has also talked about a new housing stimulus package to provide $30 billion directly to states and local governments to buy foreclosed or distressed properties. The cities and states could then resell the properties to low-income families or convert them into affordable rental housing.

    Sen. John McCain, the presumptive Republican presidential nominee, also expressed a willingness to look at Democratic proposals in a speech about the economy Tuesday.

    "I will not play election year politics with the housing crisis," he said. "I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now."

    McCain cautioned he wasn't ready to sign onto a bailout, though.

    "I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," McCain said.

    But Zandi, who is an economic advisor to McCain, said he believes McCain will support some kind of assistance to homeowners and borrowers.

    "I think he...understands that the problems in the housing market are broad and deep and threaten the broader economy, and that there may be a role for the federal government to stem those losses," said Zandi, who cautioned he was not speaking on behalf of the McCain campaign.

    Stanford Group's Valliere also said he doesn't believe McCain will be able to resist the growing tide to support federal help to troubled homeowners.

    "You have to respect McCain's intellectual honesty on this but the Frank-Dodd bill is a steamroller that can not be stopped," he said."(snip)

  2. #2
    God/dess Deogol's Avatar
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    Default Re: Mortgage Bailout Bill about to come out of the closet ...

    Why does this make me think of J.P. Morgan and the Great Depression?

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    Default Re: Mortgage Bailout Bill about to come out of the closet ...

    The only bailout that should take place is one that is initiated because it protects the economy as a whole. This "crisis" involves a very small percentage of the mortgage market. People took subprime mortgages because it allowed them to purchase properties that were really beyond their means. Why do the taxpayers have to bail them out for making a bad decision? These types of mortgages are clearly a gamble. What's next? Making losers at Foxwoods whole for their bad choices? What about that small percentage of guys who go bust in a SC? Any time you do something risky, you have to be prepared to live with the consequences if things go badly.
    "never trust a big butt and a smile"-- Bell Biv DeVoe

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  4. #4
    God/dess Deogol's Avatar
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    Default Re: Mortgage Bailout Bill about to come out of the closet ...

    Obviously then, if the answer isn't a "small percentage of the mortgage market" - then it is quite something else. Those selling homes, hrmph, "real estate investments," would like you to think something else.

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