That’s why it’s a bailout for the banks. They get to make a bigger spread and recoup their losses. The risk premium is suddenly higher to pay for the past mistakes.

But since the bank won’t lower mortgage rates, it won’t do anything to help housing.

Remember, the Fed’s job it to ensure the health of the banking system. They are there to serve their member banks and by extension the economy. But the orderly operation of the financial system is their first priority.

I heard a Greenspan interview. And I agree with him. The Capitalist system is the best thing we’ve come up with since the Age of Enlightenment.