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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. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion.
The key date to watch is August 17 when the Treasury
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.
Georgia's most prominent Democrat will be nowhere near Barack Obama when the president comes to Atlanta on Monday.
Originally posted by ghostsoldier
It was the governments lack of regulation on the banking sector that allowed this to happen in the first place.
So I think the government is doing the right thing (if this does manifest into reality), by giving people a second chance for something the government (passively) caused.
The unemployment rate held at 9.5 percent as private employers added 71,000 jobs in July, fewer than forecast, while governments cut their payrolls by 221,000.
Originally posted by hadriana
They should have just gave the bail out to homeowners with the agreement that they pay it on their homes in the first place. The money would have went to the banks.
Originally posted by Aggie Man
If this only applies to Fannie Mae and Freddie Mac, then I am wholeheartedly against it. It would not be fair to all of us who have mortgages through other lenders. This must be an "across-the-board" bailout, or no bailout at all.