More Bailouts at Taxpayer Expense
Mortgage lenders are getting even bigger taxpayer subsidies to write off mortgage loans for potentially delinquent borrowers, reports today’s Washington Examiner. “President Barack Obama last week created another subsidy for home lenders, boosting benefits to lenders under the ‘Hope for Homeowners’ program created last summer. Under the 2008 law, Washington guarantees loans if lenders gave favorable terms, including principal reduction. The amendment Obama signed last week heightens cash payments to lenders and loosens standards.”
It’s not just lenders who are getting federal payments for writing off loans, but also companies that service loans without owning them. The servicers now have a financial incentive to write off other institutions’ loans to potential deadbeats, at the expense of whoever actually owns the loan — which probably includes some of the companies your 401(k) mutual funds invested in. Essentially, it’s a bounty on your 401(k).
The Obama Administration has now devoted at least $250 billion to mortgage bailouts, including high-income borrowers whose mortgage payments are not excessive, but who face financial difficulties because of other debts they incurred through excessive consumption. This will increase a deficit that now exceeds $1.8 trillion. Obama’s budget would increase the national debt over the budgets left behind by the Bush Administration by a phenomenal 26.3% of the economy.
Powerful Wall Street firms like Goldman Sachs, a major liberal donor that received billions it didn’t need through the AIG bailout, now are being given protection against competition from hedge funds, which did not get bailouts or cause problems for taxpayers. “Wall Street’s largest banks are getting what they want in the U.S. treasury’s plan to regulate over-the-counter derivatives by making all market participants adhere to the same capital requirements,” even funds that are small and ill-equipped to handle the hassle of such regulation. “‘The banks appear to wish to maintain the intra-dealer market and raise barriers to new entrants to keep the OTC business as compartmentalized as possible and to protect their profitable market conditions,’ said Brad Hint, an analyst at Stanford C. Bernstein & Co. in New York.”