Am I missing something? I thought our problem was that we had a housing price bubble and that people were at risk of losing the homes they are in. Why would we take actions that are likely to raise the price of homes while not helping the debtors who could use it, and not helping the banks that are carrying risky loans on their books? It seems to me the Treasury has this exactly backwards.
And it’s bad politics, too. As Camden R. Fine of the Independent Community Bankers of America has said:
You have thousands of banks that made loans and have them sitting on their books, and whose borrowers have worked their rear ends off to make the payments,” he said. “Those people are going to go to their banks and tell them their neighbor just got a 4.5 percent loan, and the banks aren’t going to be able to help them. They’re going to have extremely angry and disgruntled customers.
Is anyone up for defending the Treasury’s proposed program?