In addition to all the terrible ramifications mentioned already, the bondholders will get shafted. So if your bank savings account or your money fund owns mortgage debt, it’ll be reduced to (by one estimate) 20 cents on the dollar. I don’t know if that includes Fanny or Freddie. Particularly at risk are certain mortgage REITs.
When the rent is dropped, the value is dropped, then the value of the mortgage is dropped when marked to market or when they are ordered to do so. The investors (just like the GM bond-holders) get screwed.
One more wealth transfer from the “rich” (nearly anyone with savings) to Holder’s people.
So far, this is just a speculation of what our feral federal government could do by tax wizard Geithner (he made a proposal). However, I think Obama is losing popularity so fast that impeachment becomes a very real possibility. Also, Congress, and what’s left of the Supreme Court, would have to be breached.
Impeachment is something that will NEVER happen again to a liberal. There’s not one congress person who would even have the guts to mention it.