Obama (Again): There's Nothing We Can do For Housing
So, the big financial rescue package is announced (number 3? 4?) and it includes pledges of more oversight for banks that are suckling on the public teat. It also claims it will get private money interested in buying crappy toxic securities (by guaranteeing billionaires against losses, or giving them free leverage, so they get all the upside... Wow, there's a surprise!)
But, as for helping U.S. Homedebtors out of their wealth-destroying, bubble-McMansions? Obama and Timmay Geitner have no idea. That's betrayed by this little tidbit: --Provision of at least $50 billion of the remaining $350 billion rescue fund to bolster government efforts to help homeowners deal with rising foreclosures in the current steep housing slump. The actual details on the housing measures were being delayed for an announcement in the coming weeks.
My guess is these clowns have no idea what to do. Sheila Bair had no idea what to do. She took over IndyMac and couldn't clean its house, after all. (Re-defaults are huge, and know one guy whose current, but barely, on a neg-am pick-a-payment mortgage, couple hundred K under water by now, and IndyMac won't even talk to him about a refi...)
Much of this probably stems from the sheer impossibility of untangling the nests of leins on mortgages after they were chopped up in Wall Street Chuck and sold around the world. The other part probably comes from the fact that Timmay G. and his minions know darn well that they can't put a floor under home prices -- they need to drop 20-30% more in many parts of the country before they get to rational long-term levels.
The fact is, people are either going to have to vacate the homes they can't afford and let real, responsible people buy them at lower prices, or, they're going to have to sign on for 40 years of pain. There's no way the government can "lower" mortgage rates to 4.5% by having the Fed buy treasuries up the wazoo. Look at the (now popped) treasury bubble that dropped yields to nearly nothing. Even that didn't bring mortgage rates below 4.75% or so.
There's no fix here except to let people reap what they've sown.