Cash Money Politics: Rumors Swirl That Obama May Be About to Forgive Billions In Principal For Government-Owned Underwater Mortgages

Is Daddy too remote, too feckless, and a generally bad head of household?

Well buck up sunshine. Daddy just might give you a nice shiny twenty dollar bill.

Do you love Daddy now?*

* Some people take this as referring to themselves, that by "Daddy" I mean those who got underwater with mortgages. No, I meant that Obama is the Big Daddy, but he's a bad Daddy, and so he has to bribe his family with money to love him.

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.

...

What is the "multiplier" for reducing a fixed cost that people struggled to pay? Something like 0.3? Less?

I guess that doesn't matter. The only multiplier that matters concerns the conversion of billions of dollars into millions of votes.

Thanks to DrewM.

Who's Laughing Now? Remember Peggy Joseph? We giggled at her naivete about Unicorn Skittle Poop, her assertion that Obama would pay her mortgage.

I guess we were the ones hoodwinked. Bamboozled. Led astray. Run amok.

Thanks again to Drew for that.

posted by Ace at 10:46 AM

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