President Obama is set to announce a new mortgage plan where homeowners home values far below their mortgage principal balance will be allowed to re-finance at lower rates.
The GOOPERs, the media, the Wall Street Welfare Queens will rail against 'socialism'. Rick Santelli will scream that George Washington never would have tolerated such an action and will wax nostalgic about how Ronald Reagan never bailed anyone out.
The reality is this -- the plan is a nothing more than a backdoor bailout of Bank of America. Right now, BAC faces massive losses from mortgage 'put backs' -- Fannie/Freddie can demand payment from fraudulently issued mortgages by Countrywide. That number totals in the tens of billions. Any mortgage that is re-financed now will have its 'put back' extinguished. And the new mortgage has no 'put back' provision.
This is yet another massive transfer of wealth from the taxpayer to the banks.
For the life of me, I can't understand why President Obama would sign off yet another bailout of the banks and get hit by the right.