Coming Today: A Brand New Plan to Pump Up to Reinflate the Housing Bubble That Helped Get This Whole Economic Mess Started
A Democratic insider tells ABC News about the basics of Obama's big mortgage bailout plan, set to be unveiled today in foreclosure-heavy Arizona:
The price tag is $50 billion—from the TARP funds—plus more on top of that from other programs.
Government subsidies for lenders to modify loans to homeowners who are struggling to make payments. The government would subsidize the difference.
A program through Fannie Mae and Freddie Mac for homeowners to refinance their mortgages if they owe more than their homes are worth.
An effort to make loans more affordable through various means—extending loans, lowering interest rates, and other ways.
The details matter a helluva lot, so it's tough to make any definitive statements on something like this. But this much is certain: Something has gone seriously wrong when a housing market that was pumped up into the stratosphere by all sorts of government-related actions isn't allowed to come back down to Earth. And there's certainly wrong with any solution that simultaneously acknowledges that and then moves to keep prices inflated.
Last November, at Reason Goes Hollywood in Los Angeles, Peter Wallison of the American Enterprise Insitutute analyzed the "Roots of the Financial Crisis," especially government-pushed housing policies (go here for embed code, links, and more):