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An August Surprise from Obama? (Home loan forgiveness!)
Reuters ^ | 8/6/10 | James Pethokoukis

Posted on 08/06/2010 9:59:56 PM PDT by narses

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth.

(Excerpt) Read more at blogs.reuters.com ...


TOPICS: Crime/Corruption
KEYWORDS:
An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:

1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.

2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:

GSE policies are one of a dwindling number of policy levers the administration has left to pull, so it is conceivable that changes could be made, though there is no sign that a policy change is imminent. The Treasury’s essentially unlimited ability to provide financial support to the GSEs creates an interesting situation over the next twelve months: the GSEs could potentially be used to provide additional support for the housing market and, to a lesser extent, the broader economy in 2H 2001.

And this from Mizuho Securities:

As policy makers ponder their next move the data suggests that they face not only a stalling recovery but a growing risk of deflation taking root in the economy. As a result, the Administration has turned back to industrial policies by approving the purchase of a sub-prime auto lender by GM as a means for pumping up domestic sales, especially since the latest auto sales data indicates that consumers are still responsive to incentives. This precedent increases the risk that the government will use its control of Fannie and Freddie to increase consumer cash flow and juice the economy again.

Moreover, Morgan Stanley is pushing a mortgage relief plan directly to Congress. On August 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.

3) Keep in mind the political and economic context. The nascent recovery is already running out of steam. Wall Street economists just downgraded the government’s second-quarter GDP estimate of 2.4 percent to around 1.7 percent. And as even Treasury Secretary Timothy Geithner is warning, the unemployment rate may well begin to rise back toward the politically toxic 10 percent level given such sluggish growth. Many in the White House thought the unemployment rate would be dropping sharply by this point in the recovery.

But that is not happening. What is happening is that the president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.

4) And don’t think the White House is worried about financial market reaction. If they thought it would pass Congress, they would be submitting a $200 billion Stimulus 2.0 (3.0?, 4.0?) right now.

August is supposed to be a slow month for Washington politics. But maybe not this one.

1 posted on 08/06/2010 9:59:59 PM PDT by narses
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To: narses; Irisshlass; informavoracious; larose; RJR_fan; Prospero; Conservative Vermont Vet; ...
+

Freep-mail me to get on or off my pro-life and Catholic List:

Add me / Remove me

Please ping me to note-worthy Pro-Life or Catholic threads, or other threads of general interest.

2 posted on 08/06/2010 10:01:01 PM PDT by narses ( 'Prefer nothing to the love of Christ.')
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To: narses

old news, already denied by the white house at least two days ago.


3 posted on 08/06/2010 10:01:07 PM PDT by Perdogg (Nancy Pelosi did more damage to America on 03/21 than Al Qaeda did on 09/11)
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To: narses

bump for later reading


4 posted on 08/06/2010 10:02:10 PM PDT by quikdrw (Life is tough....it's even tougher if you are stupid.)
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To: narses

http://www.freerepublic.com/focus/f-news/2565180/posts


5 posted on 08/06/2010 10:02:35 PM PDT by Perdogg (Nancy Pelosi did more damage to America on 03/21 than Al Qaeda did on 09/11)
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To: Perdogg

Well there then, Obama says not true. We believe him, right?


6 posted on 08/06/2010 10:02:44 PM PDT by narses ( 'Prefer nothing to the love of Christ.')
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To: Perdogg

Probably a “trial balloon”....I have a feeling they will try something like this....in some way....some time....even if they are denying it now.


7 posted on 08/06/2010 10:02:49 PM PDT by goodnesswins (WHEN DEMOCRATS LOSE.....America WINS!)
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To: goodnesswins

It was denied by Treasury. If 0bama does it, then he would be fried because he chastized Hillary for suggesting this in July of 2007.


8 posted on 08/06/2010 10:05:21 PM PDT by Perdogg (Nancy Pelosi did more damage to America on 03/21 than Al Qaeda did on 09/11)
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To: goodnesswins

They might make the people underwater happy, but the rest of the country that will be stuck paying for it will be furious.


9 posted on 08/06/2010 10:05:55 PM PDT by McGavin999 (I'm sorry, your race card is overdrawn and no further charges can be accepted)
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To: narses

Oh goody, Barack Hussein obama (mmm mmm mmm)’s gonna pay my mortgage from his stash!


10 posted on 08/06/2010 10:06:01 PM PDT by MuttTheHoople
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To: goodnesswins

I agree, this was a trial balloon to gauge reaction.

And the fact that the White House actually had to SAY they weren;t going to do this means that “Trial Balloon” blew up in there faces.

If they dared to do this, there would be riots in the streets. THIS is the issue that triggered the Tea Parties, if you remember.


11 posted on 08/06/2010 10:08:59 PM PDT by tcrlaf (Obama White House=Tammany Hall on the National Mall)
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To: narses

Could get a blip of new interest in the Rats this way, but how can everyone just forget the bumbles and stumbles since the dawn of the Obama era?

Maybe GOP will try to get smart and jump in front of the parade. But it couldn’t do anything sans Rats anyhow.

Me, if this happened, and I was eligible, I’d say thank you very much Bummer, now shoo Rats.


12 posted on 08/06/2010 10:09:10 PM PDT by HiTech RedNeck (I am in America but not of America (per bible: am in the world but not of it))
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To: tcrlaf

Yeah, if US has investments on the books in these guys, not the smartest thing in the world to just tell them to toss away a big piece of it willy nilly. More taxes, deeper debt, deeper deficit — a three sided devil. We want none of it.


13 posted on 08/06/2010 10:11:45 PM PDT by HiTech RedNeck (I am in America but not of America (per bible: am in the world but not of it))
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To: narses

I’m beginning to think that people are slowly getting him. Naive, trusting Americans let him and his handlers manipulate them into voting for an ethereal presence. This presence is turning into a nightmare for many who believed and trusted his rhetoric. I am so sad they didn’t awaken before November 2008. It could have saved our beloved country a lot of heartache and outright disaster.


14 posted on 08/06/2010 10:12:18 PM PDT by originalbuckeye
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To: originalbuckeye

Do you know any one who is off the bambiwagon? It seems he still has the African-american population and liberal white women.


15 posted on 08/06/2010 10:14:11 PM PDT by Perdogg (Nancy Pelosi did more damage to America on 03/21 than Al Qaeda did on 09/11)
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To: goodnesswins

OK, here’s a trial balloon to float. I know this will sound crazy, but these people seem to want to spend some money to stimulate the economy. They’ve already spent trillions in bailouts for wall street, banks, car companies, etc. So if they want to spend another paltry amount, I have this silly little suggestion. Tell me what you think.

300,000,000 people in the US (give or take). How about we give each of those people a million dollars each. That comes out to $300,000,000. Is that a lot of money for the folks in Washington who seem intent on spending BILLIONS on BAILOUTS?

But, imagine every man, woman and child in America getting a million dollars. You talk about stimulating the economy.

Tell me how my math is wrong. Why doesn’t anyone ever suggest doing this?


16 posted on 08/06/2010 10:18:00 PM PDT by erkyl (We hang the petty thieves and appoint the great ones to public office --Aesop (~550 BC))
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To: Perdogg

“It seems he still has the African-american population and liberal white women.”

And gays, which means he also has most of Major Media, too.


17 posted on 08/06/2010 10:18:57 PM PDT by tcrlaf (Obama White House=Tammany Hall on the National Mall)
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To: erkyl

The point of “Stimulus” was never stimulus, for the Democrats. It was a MASSIVE ENRICHMENT for a group of connected Democrats, and their donors, who just happen to be the big bankers.

A huge Obama-run slush fund to buy votes with, Massive monies to Unions, Democrat-run cities, and “Community Organizers”, not a damn dime for Main Street.

it stimulated government, but not the economy.


18 posted on 08/06/2010 10:23:14 PM PDT by tcrlaf (Obama White House=Tammany Hall on the National Mall)
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To: originalbuckeye; narses
I’m beginning to think that people are slowly getting him.

Well, when it reaches my deep blue neighborhood, I'll let you know.

I'm still seeing:
* BO T-shirts being worn
* BO signs in people's windows
* BO bumper stickers on cars (but there are fewer of those now)
* BO life-size cardboard cutouts in certain businesses (which I refuse to patronize)

--all the above in neighborhood where business after business has failed, where stores are shuttered, where absentee landlords cull fruit from trees so as not to attract the homeless....

19 posted on 08/06/2010 10:25:57 PM PDT by thecodont
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To: tcrlaf
300,000,000 people in the US (give or take). How about we give each of those people a million dollars each. That comes out to $300,000,000. Is that a lot of money for the folks in Washington who seem intent on spending BILLIONS on BAILOUTS?...Tell me how my math is wrong. Why doesn’t anyone ever suggest doing this?



I'd say the place where your math is wrong is where you multiply 1,000,000 dollars by 300,000,000 people, and come to a product of $300,000,000.

The answer I get is $300,000,000,000,000.00, or $300 trillion dollars.

And that's probably why nobody ever suggests doing this.
20 posted on 08/06/2010 10:30:49 PM PDT by Milton Miteybad (I am Jim Thompson. {Really.})
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To: tcrlaf

Yes, I get this. And I did figure out my math was wrong. It would be a bit more than $300 million. That is just a dollar a piece. But for what we spent on the stimulus, we could have given every man/woman/child two thousand dollars.

This might actually wake a few sleepers up.


21 posted on 08/06/2010 10:32:08 PM PDT by erkyl (We hang the petty thieves and appoint the great ones to public office --Aesop (~550 BC))
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To: Milton Miteybad

I was never good at math. I’ve now proven it. ;-)

But, hey, at least I figured it out right on my own.


22 posted on 08/06/2010 10:33:43 PM PDT by erkyl (We hang the petty thieves and appoint the great ones to public office --Aesop (~550 BC))
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To: Perdogg
If Obama and Company thought this move would retain their control of the House and Senate, they'd do it in a heartbeat. I mean, why would they not?
23 posted on 08/06/2010 10:34:21 PM PDT by no dems (To Every Democrat in the U.S. House and Senate: "Shame, shame. Shame on all your houses.")
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To: Perdogg
If 0bama does it, then he would be fried because he chastized Hillary for suggesting this in July of 2007

Yeah; like the average, lazy, uninformed American voter knows what Hillary said and what Zero does. They don't give a rat's butt as long as they benefit from it financially.
24 posted on 08/06/2010 10:38:01 PM PDT by no dems (To Every Democrat in the U.S. House and Senate: "Shame, shame. Shame on all your houses.")
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To: Perdogg

0bama fried? By whom?


25 posted on 08/06/2010 10:44:44 PM PDT by GreyMountainReagan ("Pray for America")
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To: erkyl
You posting this again? Your math is off by a factor of ONE MILLION.

Serious question are you trying to be stupid?

26 posted on 08/06/2010 10:47:01 PM PDT by GreyMountainReagan ("Pray for America")
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To: thecodont

So sorry to hear. I thought America was wising up. I may be wrong.


27 posted on 08/06/2010 10:54:00 PM PDT by originalbuckeye
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To: narses

Wait a minute, what about me. We paid off our mortgage. Our house is worth less than we paid though. Can I get a refund? What about me!


28 posted on 08/06/2010 11:15:36 PM PDT by gunsequalfreedom (Conservative is not a label of convenience.)
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To: Perdogg
If 0bama does it, then he would be fried because he chastized Hillary for suggesting this in July of 2007.

Right.

Just like he's been 'fried' for reversing course on so many other things he said during the campaign, or since.

The only thing more disappointing than how much our elected 'representatives' depend upon the public's short memory, is the degree to which they are right.

Let's see -- 0 redistribute more dollars from the people who work, live within their means, and pay their bills, to the people who don't, for the purpose of keeping the democrat party in control and himself in office.

Gee, Olly, he'd NEVER do that, would he?

Of course, I'm sure he will give Bush credit for the program, since the HARP came out of Bush's term. /sarc

I'm curious, though -- would 0 appoint another czar to 'oversee' the process?

29 posted on 08/07/2010 1:44:48 AM PDT by Quiller (When you're fighting to survive, there is no "try" -- there is only do, or do not.)
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To: erkyl

I am on board - trickle UP economics yeah! I actually suggested this to my Rep.....funny thing she didn’t get back to me.... Guess we’re lunatics....it obviously makes more sense for us to give our $$$ to the Wall Street/banker crooks who are stealing from us.....and caused this in the first place!

Conspiracy theories are all that make sense anymore - see:

Prisonplanet.com


30 posted on 08/07/2010 1:48:57 AM PDT by kickme (...at the window watching...waiting for my NUKalert to start chirpin'....)
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To: erkyl

1 stimulus = $10,000 CASH for every nuclear family in America

or $2,000 as stated for every man woman child


or

amazingly,

$500 for EVERY family/ house/ hut in the ENTIRE world

Maybe that’d make ‘em finally l like us.

Hell, better than what we did get which was NOTHING !!!


31 posted on 08/07/2010 1:49:54 AM PDT by DontTreadOnMe2009 (So stop treading on me already!)
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To: narses
Some 20 percent of mortgages are “under water”. Not all families hold mortgages, say about half. This means about 10 percent of the families in the country hold under water mortgages. A sizable percentage of the 90 percent without underwater mortgages understands the the mortgage problem was CAUSED by Democrat policies. Do the Democrats really believe that Americans are stupid enough to think that if Obama gives the underwater ten percent free money, the rest of the country will vote for Democrats?
32 posted on 08/07/2010 5:00:31 AM PDT by norwaypinesavage (Galileo: In science, the authority of a thousand is not worth the humble reasoning of one individual)
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To: erkyl

Well your math is wrong because your $300,000,000 is actually only $1 per person, which probably won’t “help” much at all!


33 posted on 08/07/2010 6:40:43 AM PDT by GatorGirl (Eschew Socialism!)
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To: narses

The government will probably want it’s money back (with interest) if you make a profit selling your house.


34 posted on 08/07/2010 7:24:03 AM PDT by Mike Darancette (Socialism is the philosophy of failure, - W Churchill)
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To: Perdogg

He still has African-Americans, liberal white women, American Jews, the media, many Catholics, many minority groups, entertainers, teachers, and the dunderheads.

He’s doing okay.


35 posted on 08/07/2010 12:57:50 PM PDT by Melian ( God is even kinder than you think. ~St. Teresa)
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To: GreyMountainReagan

Hey I admitted in two separate posts that I was stupid. You don’t need to pile on.

:-P


36 posted on 08/07/2010 7:48:47 PM PDT by erkyl (We hang the petty thieves and appoint the great ones to public office --Aesop (~550 BC))
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