In one of the stupidest wastes of Treasury monies this month—a major accomplishment, though AIG hasn’t hit the trough again yet, so there might be hope—the Treasury wants to subsidize new mortgages (link to CR):
Under the plan, Treasury would buy securities underpinning loans guaranteed by the two mortgage giants, which are temporarily under the control of the government, as well as those guaranteed by the Federal Housing Administration. [amazement, not to mention emphasis, mine]
This will, of course, address the underlying problem perfectly:
Government officials are under pressure to stem foreclosures, which underpin much of the current financial crisis. Treasury has struggled for months to come up with a plan that would ease the market without appearing to bail out homeowners and lenders.
It’s Deborah Solomon, so we expect lies and deception. So let’s fix that last sentence:
Treasury has struggled for months to come up with a plan that would ease the market without appearing to bail out homeowners having already provided ridiculous amounts of money to the lenders.
There. Much better.
*Someone please break the news to the Ed Leamers of the world that those are tax dollars that are being used as “monetary policy,” which will be just as much of a liability to future generations as his “fear of public goods spending,” except that we get a boost to profits when we build public goods. Good thing he’s not an economist or…never mind.