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| "When the electorate finds it can vote itself money..." | |
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| Tweet Topic Started: Aug 5 2010, 06:54 AM (185 Views) | |
| George K | Aug 5 2010, 06:54 AM Post #1 |
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Finally
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An August Surprise from Obama? James Pethokoukis 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. The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points: 1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening. 2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:
And this from Mizuho Securities:
Moreover, Morgan Stanley is pushing a mortgage relief plan directly to Congress. On August 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages. 3) Keep in mind the political and economic context. The nascent recovery is already running out of steam. Wall Street economists just downgraded the government’s second-quarter GDP estimate of 2.4 percent to around 1.7 percent. And as even Treasury Secretary Timothy Geithner is warning, the unemployment rate may well begin to rise back toward the politically toxic 10 percent level given such sluggish growth. Many in the White House thought the unemployment rate would be dropping sharply by this point in the recovery. But that is not happening. 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. 4) And don’t think the White House is worried about financial market reaction. If they thought it would pass Congress, they would be submitting a $200 billion Stimulus 2.0 (3.0?, 4.0?) right now. August is supposed to be a slow month for Washington politics. But maybe not this one. =-=-=-=-=-=-=-= Haven't we run out of OPM yet? |
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A guide to GKSR: Click "Now look here, you Baltic gas passer... " - Mik, 6/14/08 Nothing is as effective as homeopathy. I'd rather listen to an hour of Abba than an hour of The Beatles. - Klaus, 4/29/18 | |
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| Mikhailoh | Aug 5 2010, 07:01 AM Post #2 |
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If you want trouble, find yourself a redhead
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We're surely working on it. |
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Once in his life, every man is entitled to fall madly in love with a gorgeous redhead - Lucille Ball | |
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| Jolly | Aug 5 2010, 07:10 AM Post #3 |
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Geaux Tigers!
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George W. Bush attempted 17 times during his Presidency to bring some kind of oversight to Fannie and Freddie. With over $1,000,000,000,000 of loans that could go in the crapper, we might one day be looking at the largest bail-out, evah. And yet Obama wants to throw more money around like a drunken sailor with 6 hours left on his shore pass. |
| The main obstacle to a stable and just world order is the United States.- George Soros | |
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| Horace | Aug 5 2010, 07:12 AM Post #4 |
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HOLY CARP!!!
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I will probably never own a home as long as I'm in CA if this happens. |
| As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good? | |
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| jon-nyc | Aug 5 2010, 07:48 AM Post #5 |
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Cheers
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I thought this was another thread about the Bush tax cuts. |
| In my defense, I was left unsupervised. | |
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| George K | Aug 5 2010, 07:53 AM Post #6 |
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Finally
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Funny how that worked out: ![]() |
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A guide to GKSR: Click "Now look here, you Baltic gas passer... " - Mik, 6/14/08 Nothing is as effective as homeopathy. I'd rather listen to an hour of Abba than an hour of The Beatles. - Klaus, 4/29/18 | |
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| jon-nyc | Aug 5 2010, 12:52 PM Post #7 |
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Cheers
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I never claimed it wasn't a good election strategy. (nnttm) |
| In my defense, I was left unsupervised. | |
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4:23 PM Jul 10