Question about the Freddie/Fannie bailout

[Orrex]

:rant:

Why didn't the government "bail out" these clumsy giants by directly "bailing out" the poor schlubs who'd stumbled into unsupportable mortgages? Rather than dole out billion-dollar heaps to the creditors, why not pay off a few thousand of the underlying mortgages? That would seem to accomplish the same thing and more--the creditors are made whole, and the debtors are protected from foreclosure and loss of residence. They could also have frozen the interest rate at this or that level to prevent the wild fluctuations that have fucked the whole thing up in the first place.

Hell, even a split bailout, wherein the government gives half of its blank check to the creditors and uses the other half to pay part of the debtors' mortgages, would seem preferable. Maybe the government could cover half of each monthly payment for some set period, or else make all the payments for one year and partial payments thereafter. Wouldn't that provide a cushion to help the homeowner get through the crisis period?

And it wouldn't have to be all mortgage holders, of course. Only mortgages on primary residences, for instance, or mortgages for families below a certain income level. Etc.

Why pay off Fannie/Freddie directly? Why give another hand out to the multi-billion dollar entities, with no requirement of repayment or promise of change in policy? Or would that qualify as the dreaded "redistribution of wealth" so hated by the GOP and its MSM?


I suppose that it's okay to redistribute wealth to the already wealthy, of course...


Your thoughts?

[ixion]

1. we are a corporate oligarchy

so it makes sense that they're bailing out those whom they care about the most, and pass those costs on to the people who bear the burden of their decisions: you and me.

[Orrex]

6. Sad but true

I wouldn't mind so much if they'd just be up front about it. Why not say "fuck you little guys--we're helping out the billion-dollar industry giants, and you can fend for your miserable little selves" and be done with it?

[stray cat]

2. As Bush stated Americans can balance their checkbooks - we must help the poor corporations.

[Orrex]

7. It's a shame that the deck is so badly stacked against corporations

How can they hope to get ahead in the face of all these tax loopholes, bailouts, and congressional puppets?

[TZ]

3. The ONLY rationale for this

At least in my book is that Freddie and Fannie are huge employers in my area..Should they go under..that would be a lot of people around here out of work--I know people who work there, so this is something I'm a little sensitive to.
However, I do think I like your idea very well.

[Orrex]

8. I agree that that's a valid concern

They are indeed huge employers, and you can be sure that the people who'd suffer in the event of bankruptcy wouldn't be the multi-millionaires at the helm; it would be the employees.

Perhaps that's another argument in favor of nationalizing this too-big-to-allow-to-fail entity?

[BlooInBloo]

4. Because this way it's a two-fer. The banks get bailed out, while keeping their yoke on the lil guy.

[Orrex]

9. I see. Everybody wins, in other words!

:puke:

Sadly, I believe that you're correct...

[kentuck]

5. Because the Fannie and Freddie stocks price hit bottom...

and they want the big stockholders to be bailed out by guaranteeing their stocks.

[Orrex]

10. I would weep for the rest of my days if those poor multi-millionaires lost a few million.

Thank goodness the government was eager to shovel some taxpayer money into Fannie/Freddie's collective maw.