The Washington Post has a decent editorial today titled “Holes in the Roof” on Rep. Barney Frank’s (D-MA) Housing bailout plan still snaking its way through Congress. Leaving aside the fact that the Post low balls the cost of the bill (the $1.7 billion they cite does not include another $1 billion in administrative and counseling costs), they do identify the core flaws of the bill: In terms of systemic risk avoided, the bill may be oversold. Mr. Frank’s program is voluntary, and, while banks might find it an attractive …
The Washington Post reports today that “Senate negotiators broke off talks last night without striking a deal to rescue hundreds of thousands of homeowners at risk of foreclosure, but they said they were close to an agreement.” Let’s hope they don’t get any closer. A key part of the housing bailout plan includes upping the size of the loans Freddie Mac can buy and resell from $417,000 to $730,000. Without Freddie’s ability to buy these jumbo loans, the rest of the housing package won’t work because the securities industry will …
