OK, if you're going to screw up...
Might as well screw up really BIG!
Someone will probably scrawl that with spray paint on Paulson's tomb one day.
FDIC says plan could help 1.5 million keep homes: Financial News - Yahoo! Finance
Truth is, this whole affair has been one big pump fake from the start. Paulson stampeded the government, like so many panicked lemmings, right over the Bailout Bill cliff...
And now he's discovered, just when it was time to start spending some of the money in the now-misnamed TARP (Troubled Asset Rescue Plan) on actually BUYING Troubled Assets, that maybe that's not such a great idea.
Hurrah! I say, for THAT was the biggest objection I had all along - that buying foreclosed properties worth lots less than book value from perfectly solid banks was WRONG!
Now he's saying that they are just going to use the money to acquire equity positions in companies.
Again, this circles back to the idea that we are BUYING something, rather than just doling out free money to the "needy" (which in the bizzaro world of this crisis, included some of the richest corporations and individuals on earth).
This new tack makes LOADS more sense to me.
Now we see the FDIC jumping ship - aligning with an Obama administration which doesn't exist yet, and going over Paulson/Bush's head to the Congress for $24billion for the banks.
Oh, the way it will be structured would be as COMPENSATION to the banks for them cutting deals with their customers who already have "modified" loans (ie, loans where massive fines, fees and penalties have been added to a restructured sub-prime loan that STILL can't be paid back by the homeowner). This is like the last step BEFORE outright foreclosure.
I have mixed feelings about this. I think of this as a bandaid for a gapping wound, one that is killing both the individuals losing their credit and homes - and the moron banks who are losing billions of collars and teetering toward insolvency because of their own hidebound inflexibility.
The FDIC is right, sort of, but wrong about how to go about achieving their goal.
For one thing, no way should we be bribing banks to fix the broken mortgages. The answer is OBVIOUS: Restructure those subprime adjustable loans into sound, solid, fair, 30 year mortgages with standard terms - and FORGET all the accumulated fines and fees, all they are doing is insuring that you will end up losing another paying customer and inheriting another house worth 70% of your book value!
I know, this seems obvious, but believe it or not, banks are NOT doing this. They need a kick in the ass, NOT a fat bribery check from the U.S. taxpayer!
Time to turn some of those liberal bureaucrats loose on the ONLY thing they do well - formulating regulations to FORCE the Banks to save themselves (and us and millions of their own customers)!
So, here I am, supporting Paulson for FINALLY figuring out a little piece of the problem - supporting the FDIC for trying to do the right thing (but the entirely wrong way) - and supporting the liberal bureaucrats assuming they can figure out how to properly construct an actual bank regulatory law WITHOUT including some hairballs like Freddie, Fannie, or mountains of pork!
It COULD happen, but I doubt it.
What is much more likely is that Congress will do what Congress does - spend our money, so that the banks get paid from both sides, but don't alter their behavior or stop the bleeding - LOL, ha, in fact they will be getting paid by both sides to BLEED SOME MORE!
Amazing.
Reminds me eerily of LBJ and the Great Society paying poor people to produce babies.
TARP, Paulson, and the Pump Fake 
