Well, over the weekend the Housing Bill was passed by a 72-13 vote in the Senate. Now, we wait for President Bush to sign and all will be fixed it seems. Yeah right !
It must have been an interesting conversation that the Senators had when they discussed how the U.S. government would now be partners with homeowners their home’s future price appreciation, as long as they take a deal they cannot refuse. To be honest, I think it is unconscionable that the the U.S. government is now going to “own” a portion of the greatest asset that most people will ever have.
Of course that is only after lenders “volunteer” to write-off a portion of what they are due to help out borrowers. Also, with that, Senators also asked Santa for a new train set and a puppy for Christmas. The Wall Street Journal is reporting:
The centerpiece of the legislation is a program of up to $300 billion of FHA-insured mortgages to help refinance cash-strapped borrowers into affordable loans. The program would rely on lenders voluntarily writing down the value of a distressed loan for the homeowner to qualify for the new FHA-backed loan, and in return borrowers would have to share future price appreciation with the federal government.
This should do wonders for the dollar. Already the rest of the world is looking at us with bewilderment. If the U.S. were a publicly traded company, aside from the stock being in the toilet, the bonds would be rated JUNK!
What are they thinking? How is the government going to add another $300 billion to the tab? Between Iraq and this mortgage mess, this administration has racked up more expenses in the shortest time then can be remembered. The truth is that it is Bush’s Administration who is drunk and has been out all night partying with Wall Street, War Street, Energy Street and Reckless Spending Street.
The moral hazard has just entered the red zone gang. Cronyism at its best – and maybe a touch of nepotism as well.
Maybe there is a plan within this somewhere, but I don’t see it. Do you?