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Economic News, Data and Analysis

Read the Fine Print!

I think we all know now to read the fine print when it comes to mortgages….
Gene and Jared note the fine print of the McCain bailout.

Jared Bernstein and Gene Sperling: Ouch! McCain’s Housing Solution Is a Gift from Taxpayers to Banks

But today we learned of a detail that makes his plan significantly different — and much worse. The McCain plan uses taxpayer dollars to buy distressed mortgages at their full, face value from the banks and lending institutions that are currently stuck with them. Only then, after we the taxpayers have fully absorbed the cost to the lender of these troubled loans, does the homeowner get the benefit of the lower principal.

That’s right folks…it’s private profits and social losses. Instead of an effort to safeguard taxpayers as Senator Obama has called for and the Frank-Dodd bill goes to great lengths to do, this plan takes from taxpayers to provide unjustifiable subsidies to financial institutions – even those who engaged in deceptive or outright fraudulent practices to induce people into homes they could not afford.

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