It Saves Money !

The chatter on the Beltway is a big Democratic pressure push on Fannie and Freddie to write down principle on 300,000 to 500,000 mortgages. The actions by Wells Fargo on its own is being held up as a strong example. Leverage is being applied to the Conservator to play along as accounting projections are circulating showing a decent "savings" to the GSEs and thus the taxpayers.

This will no doubt become an election hot button issue. The right will have a hard time not pushing back and vocal TV commantators will surely stoke populist anger. The timing will certainly look like "buying" votes. Objectively, the policy does keep homeowners in the game and statistics show adjusted homeowners do fight harder to stay current. As Treasury counts the "profits" from TARP and the Fed turns over another 78B in carry to Treasury, this idea will finally shed some light on the Fan/Fred balck hole. Even if the plan reduces costs, spending less is not saving.

One thought on “It Saves Money !

  1. A Stickler

    You misspelled “homedebtors” multiple times in this article. People who owe and need a principal write down to stay current are nowhere close to “homeowner” status.

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