Defending the Truth

Two pieces on the topic of the housing crash and possible mortgage bailout appeared on TomPaine.com recently.

This caught my eye because of the interesting contrast, as one paints Barney Frank as the problem, and the other paints him as championing the solution.

This editorial:
The Housing Crisis and The Plague of Potomac Fever | OurFuture.org

As states move to crack down on predatory lending and abusive mortgage fees, lawmakers like Rep. Barney Frank, D-Mass., have been telling reporters "it's irrelevant" how many—if any—homeowners are ever helped by anything Congress does in reaction to the housing crisis. As state legislators use their platforms to demand serious aid to borrowers, Washington moves to construct a bailout for financial firms.

This is the contrast between minimally healthy (though certainly imperfect) democratic systems in the states, and a federal government ravaged by Potomac Fever—the illness whereby professional politicians forget who they were elected to serve.

And this article, suggesting there may be help on the way. The whole program would cost all of $6 billion, or roughly what we throw away in Iraq every 10 days, and likely actually MAKE the government some money. It's sensible and would help regular people, so of course, Bush opposes it:

House panel passes sweeping mortgage aid bill | U.S. | Reuters
WASHINGTON (Reuters) - The House of Representatives Financial Services Committee on Thursday approved a sweeping bill to enable the government to finance $300 billion in distressed mortgages with the aim of helping 2 million homeowners.

Under Frank's plan, the homeowner and federal government would both reap a windfall if home prices increased in the first years after the FHA finances a loan. Mortgage investors, though, would be cut out of home price gains.

Progress is being made.
The plan makes sense, won't cost much, and will help people... so of course, W plans to veto. Bailing out Bear Stearns, A-OK. Helping the American people, no way.

washingtonpost.com

The House yesterday approved an ambitious plan to rescue hundreds of thousands of homeowners at risk of foreclosure by helping them trade exotic loans with rapidly rising monthly payments for more affordable mortgages backed by the federal government.

Bucking a White House veto threat, 39 Republicans joined Democrats in supporting the bill, the centerpiece of a broader housing package that represents Washington's most aggressive response to the nation's housing crisis.

Under the proposal, lenders would have to take a significant loss, permitting borrowers to pay their original loans with new loans worth no more than 90 percent of their homes' new, lower value. Extra fees charged by the FHA would lower the payoff to lenders to 85 percent of a home's current value.

Borrowers would get lower monthly payments and an immediate equity stake in their property. If home values rise, the plan requires homeowners to share their profits with the federal government when they sell or refinance.

The Congressional Budget Office estimates that as many as 500,000 homeowners will benefit from the program. But more than a third of those borrowers are likely to default, the CBO estimates, forcing the FHA to pay off their loans and take possession of their property at a cost to taxpayers of $1.7 billion.