This provision, and several others that Piggs are calling attention to, have the effect of limiting the real applicability of the “bailout”, and thus lowering its immediate cost to the government. These provisions also show little real good will accrue to the FBs. Several observations:
1. Us critics have had the salutory effect of watering down the impact of the bill until it is practically toothless.
2. Home prices will continue their downward correction.
3. Politicos, and the vast army of supporters of the bailout, will be able to claim they did their best to help FBs.
Notice how each provision of the bill is amenable to sound bites and slogans. Yet, as the Piggs have pointed out, they are so loaded with exceptions, long run costs, and limitations that the impact of the bill will be nil.
4. Since little of substance has happened to arrest the fall of real estate, the GSEs, now formally backed by taxpayers, will cost us dearly over time.
