As the New York Times reported on Thursday, President Bush is endorsing “an industry-lead plan, not a government bailout.”
I’m less concerned about what we call it, and more interested in what the results will be. If less than 20% of subprime borrowers can qualify, I don’t think that will slow the crisis too much. I agree that helping 360,000 people is likely ‘good’, but it won’t solve the problem (the other 1.4 million that will foreclose), and it does allow for reckless behavior. How this props up the value of the CMDs those mortgages comprise remains to be seen. In the end, doesn’t this 5 year delay just take part of today’s problem and push it out to 2013? At this point, I don’t have any answers, just more questions on how this will all get played out.
For those who take the stand that the borrowers are to blame, well, there’s blame to go around as I’ve discussed in the past. Now, this plan may at least help more than 300,000 homeowners and salvage some portion of the debt obligations created from the packaging of these loans. Time will tell, and I’m sure more details will follow.