According to Paul Krugman in the RGE Monitor today, the new housing bill is a "temporary fix":
Even if this bill succeeds…, it … will, at best, make a modest dent in … foreclosures. And it does nothing … for those who aren’t in danger of losing their houses but are seeing much if not all of their net worth wiped out — a particularly bitter blow to Americans … nearing retirement…
He sees a need for more regulation:
Financial regulation needs to be extended to cover a much wider range of institutions. Basically, the financial framework created in the 1930s, which brought generations of relative stability, needs to be updated to 21st-century conditions. …
If the government is going to stand behind financial institutions, those institutions had better be carefully regulated — because otherwise the game of heads I win, tails you lose will be played more furiously than ever, at taxpayers’ expense.
But how likely is change?
Proponents of expanded regulation, no matter how compelling their arguments, will have to contend with very well-financed opposition from the financial industry. And as Upton Sinclair pointed out, it’s hard to get a man to understand something when his salary — or, we might add, his campaign war chest — depends on his not understanding it.
Could that be why so many people don’t understand it?
I think that’s why we are calling it a bailout. The foreclosures will have to run their course no matter what. The few who can get some help from it are the lucky ones. The rest just are not smart enough with money or are smart with money and will game the system as they always do. We live in a temporary fix kind of society.
Here is the grandfather report on the state of social security.
http://mwhodges.home.att.net/deficit-trusts.htm
I like Krugman. I think he is more honest than most in the MSM but marginalized because of it even if it tends to be left of center. But reality bites. Short of a fairy tale magic wand (remember Bush said he wishes he had one) there will be more foreclusures, job loses, and loan defaults. We are no where near the bottom. Wishing it away and discombobulating the truth won’t work in the long run. This has got to play out and it’s gonna be fugly.
Upon closer examination this housing bill is looking more and more like a smoke screen. The lending part is a joke. Did away with FHA downpayment assistance. Added 1/2 to the required downpayment. Requires borrowers to jump through flaming hoops to get a loan modification. And then after they get it, requires them to share half the appreciation (if that ever occurs) with FHA. Most borrowers will probably just walk away. The GAO estimates 400,000 borrower could qualify. Those in the biz say we will be lucky to see 80,000 even apply. The real bail out was the backing of the GSEs. This could save the day or saddle us taxpayers with even more debt.
Freddie Mac Pushes Out Foreclosure Timelines:
allows previously modified loans to be re-modified.
from Housingwire http://www.housingwire.com/2008/07/31/freddie-mac-pushes-out-foreclosure-timelines/
Igor says: deceive