Another Really Bad Idea to Fix Housing

From today's WSJ. I keep searching for the punchline but it appears to be real:

Federal Deposit Insurance Corp. Chairman Sheila Bair is finalizing a legislative proposal that would allow the Treasury Department to make direct loans for close to one million homeowners in the latest government initiative to stabilize the slumping mortgage market.

For loans to qualify, mortgage investors would "pay Treasury's financing costs and agree to concessions on the underlying mortgage to achieve an affordable payment."

To modify one million loans, the FDIC estimated it would require a $50 billion public debt offering. Treasury would recoup the costs because it would have the first priority to recover funds if homes are sold, refinanced, or if the borrower goes into default.

So the State plans to modifying private contracts to appease the chattering classes.  If contacts can be changed by bureaucratic whim, what good are they? If this goes through count on the cost of a mortgage to go up to compensate the banks for the risk of more state control.

And another tax payer funded bailout. It's like these politicos have the memory of a goldfish...

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