An August Surprise from Obama?

Reuters ^ | 8/5/2010 | James Pethokoukis

[Qbert]

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:

1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.

2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:

[The Wizard]

it won’t help the dems

[Qbert]

“I still remember reports of a North Carolina woman asserting that “It’s like Christmas!” after the passage of IdiotCare.....if that was Christmas, I wonder what she would call this major redistribution of wealth stealth move by the AnnointedIdiot...../s =.=”

Not to mention the one Obamabot who was ecstatic because Obama’s “gonna put gas in my car; pay my mortgage”. Apparently, she was right...

[mojitojoe]

[SlayerOfBunnies]

Um - a loan - even a bad one is still an asset on the bank’s books. Zeroing out an asset is bad for the balance sheet.

[GSWarrior]

Typical behavior of the federal government. Create a problem and then come riding in to the rescue.

[mojitojoe]

http://www.youtube.com/watch?v=P36x8rTb3jI

http://www.youtube.com/watch?v=19v5Kjmc8FI

[varon]

The FRench overthrew their gubamint for far less..

Eventually, the French way, might be our only option.

[PigRigger]

Looks like the President is getting ready to hand out some more pie to the hungry peoples....and guess who made that pie?

Not a smart move Mr. President....the blow back on this would be something fierce...and likely ensure a Republican controlled congress come November.....

[Mouton]

Bingo, you got my sarcasm!

[snowsislander]

Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth.

I've searched for another independent source for this rumor posted on a blog at Reuters, and I haven't found one. Is anyone able to find such? There are a few blog postings derived from Mr. Pethokoukis's blogging, but none so far that stand on their own.

[Dubya-M-DeesWent2SyriaStupid!]

Another Obama scam.

http://www.freerepublic.com/focus/f-news/2565063/posts

[paulycy]

“Eventually, the French way, might be our only option. “

Great minds, etc...

Given that we are truly in a minority-rule tyranny now I was wondering if our next “uprising” would be more like the French Revolution than the American.

Lady Guillotine speaks louder than words.

[OCCASparky]

And what of the people who pay their bills on time, or who are underwater but NOT going through Freddie and Fannie?

Bread and circuses, people. Just the first step.

[FrankR]

Wow (said sarcastically)...will it be a big success like the Simuli have been...zilch. Or "Cash for Clunkers"...?

This butthead is STILL out tossing taxpayer money around to attract the "moocher" class at the expense of our nation.

Given a choice, I would rather lose my house, than lose my country. In a real America, we can recover from losing a house...but once America is gone, it will be a cardboard box in obamaville.

And doing it right here before the elections is like a husband apologizing to his battered wife AFTER the judge sentences him to jail.

FUBO

[An Old Man]

If more irresponsible spending and more unsustainable debt gets enough votes for the Democrats to protect their congressional majorities, it will prove that America is irrevocably on the suicidal path to economic collapse.

Aw comon spok, can't ya givem just one more little chance?

[Jack Black]

CWII Ping.

The end of contract law, along with the voiding of the foundations of democracy via judicial dictatorship is where we are. What comes next is the interesting question to ponder.

[Atlas Sneezed]

Right into the pockets of bankster investors who profited during the boom, and are being paid off in a bust.

When my investments go down, I don’t get paid off by the government.

[bamagirl1944]

How do you suppose all those people who have lost their homes are going to like this??? I, for one, would be ticked.

[Red in Blue PA]

WTF?

[DBrow]

Probably the intent, via Cloward and Piven.