A few followup points on the bailout thing.
First, I hope this was clear, but the efforts I mentioned were not by any stretch intended to be comprehensive list of interventions either proposed or already underway. It was just a smattering off the top of my head. I even forgot to include the most appalling one of all: the allegation that Treasury Secretary Paulson was pushing to give taxpayer money to subprime lenders to compensate them for losses they would incur in working out delinquent mortgages. (I was unable to confirm that tidbit anywhere else, so I’m not sure if it’s accurate — hopefully not!)
Second, a reader wrote in to say that this (by which I mean the assorted monetary and legislative interventions underway) is about helping financial markets, not about helping individual homeowners. Now, if you’re really going to follow the chain of intent to its end, I would argue that this is about buying votes or re-appointments by trading short-term problems for long-term ones. But that said, I do agree with my correspondent’s general theme. By virtue of the ability to turn home equity into money (for a fee, of course), the housing market has come to play a crucial role in both the financial markets and the economy itself. Given that politicians and Federal Reserve members seem to have decided that it’s their collective duty to prevent a recession from ever happening again, the bulk of these policies are probably less about helping kindly old ladies stay in their homes than they are about keeping the economy and financial markets afloat.
Third, I don’t really want to dig into the guts of the new federal rate freeze because everyone else is doing it and, let’s face it, it’s kind of boring. But one line in this Bloomberg article jumped out at me:
To be eligible, borrowers must not be more than 60 days behind in their payments or have less than 3 percent equity in their property.