at least from what i understand, which is subject to being wrong....this isn't a federal policy, the feds called a party of banks together and hammered something out so the banks don't fuck themselves....which could cause far more damage with the FDIC needing to come in and bail out the responsible folks who actually have money in banks these days.

i dont see this as a reward for the stupid. at best marginal borrowers get to keep paying for a house, now that there's no real money left on the bond market to fund mortgages...they aint going to be buying a new house. the banks at best dont go insolvent and certainly dont get revenue improvements.

the bond market probably isn't going to be thrilled which is going to keep the liquidity shortage going so i really dont see this as a bailout, the banks are going to have problems one way or the other. shitty interest rates keep people out of the bond market, and lenders are forced to up their standards on who gets a loan.

at best, this move...which has federal blessing, but is well short of a policy will keep the feds from bailing out the rest of us when banks go belly up. it'll keep the banks from going to the arab world for funding...or at least more of them from going. this isn't a great move, but i think its probably the best we can make of a shitty situation.

as the article states, the rest of us benefit because the volume of foreclosures means a major shortfall in property taxes...in my area 80% of the property tax bill goes to education. its in my interest for these jackasses to keep paying their property taxes.

Is this a government bailout with actual tax dollars being spent

its not, no federal rescue dollars are in play on this move. a group of banks are looking at a proposal from the feds. its not a good deal for them, but its better than being forced to foreclose on a lot of loans.

adjustments to the prime rate will not change the situation. mortgage interest rates are driven by the bond market which is completely independent from the prime rate.