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    "A Bureaucratic and Administrative Nightmare"

    7th Circuit U.S. Court of Appeals judge Richard Posner and Nobel Laureate Gary Becker weigh in on President Barack Obama’s mortgage bailout plan on their Becker-Posner blog. First up, Posner: The four measures, taken as a whole, are likely to be administratively complicated, costly, and slow, and so have very … More

    Neighborhood Destabilization Act: H.R. 1106

    “Helping Families Save Their Homes Act”? Or Neighborhood Destabilization Act: Allows bankruptcy judges to reduce the principal owed on a mortgage, a practice often referred to as a “cramdown.” Judges would be able to reduce interest rates or lengthen the term of the mortgage. H.R. 1106: It actually achieves opposite … More

    Market-Based Solutions: The 20% Zip Code Housing Plan

    University of Chicago school of business professor Luigi Zingales has a plan to address the housing crisis that doesn’t involve bankruptcy judge cram downs or a federal government bailout. Before he gets to his plan, Zingales outlines what any government intervention in the marketplace must prove before it should be … More

    The Mortgage Financing Game

    Congress is lining up the list of suspects to assign blame for the financial crisis. However, all of the obvious suspects — the Fed, Fannie and Freddie, mortgage companies, banks and borrowers — have been players in the mortgage market game for years. Why is there a crisis now? Perhaps … More

    Morning Bell: Vital and Acceptable

    The $700 billion financial rescue that the House will vote on today is a significant improvement over the drafts released last Friday, and the Friday before that. According to the Congressional Budget Office, the plan will eventually cost “substantially less” than the oft-quoted amount of $700 billion, and it even … More

    Any Financial Cleanup Plan Must...

    Democrats on Capitol Hill are claiming they have reached a deal with President Bush on a plan to cleanse the financial system of bad housing-related assets. So far, it doesn’t seem as though any conservatives have signed on. As lawmakers debate the merits of the sketchy plan, we have identified … More

    Understanding the Credit Crisis

    Heritage fellow JD Foster explains what led to the credit crisis and why it cannot be ignored. There are unprecedented problems in the financial markets. The Federal Funds Rate is the No. 1 tool that the Federal Reserve Board has for governing monetary policy. The Federal Funds Rate jumped much … More

    Morning Bell: Having Their Cake and Eating It, Too

    Yesterday before the Joint Economic Committee, Federal Reserve Chairman Ben Bernanke made a clear case as to why federal action is needed: home mortgages and car loans had become harder to get, commercial credit was becoming scarce for many businesses and consumer spending had already declined. Leaders in both parties … More

    Morning Bell: The Wrong Direction

    There is no doubt that past government intervention in the market, particularly by Fannie Mae and Freddie Mac, is largely to blame for the current financial turmoil. And while past government intervention cannot be used to justify further government interference, we also have to ask how much unnecessary pain the … More

    Morning Bell: Did Ken Lay Get to Write Sarbanes-Oxley?

    The $700 billion that Treasury Secretary Hank Paulson is requesting from Congress to restore liquidity in the financial markets is a breathtaking sum of money. But it is also important to remember Paulson has already committed $200 billion to recapitalize Fannie Mae and Freddie Mac. The size of their bailout … More