Now that there is a final bailout plan to be voted upon, we can assess how the negotiations went for progressive public policy. In other words, how focused on "Main Street" is this bill, really? Will it help prevent foreclosures and provide assistance to the millions of Americans taken in by deceptive marketing offering them credit they couldn't afford to pay back?
The good news is that the bill strengthens the Hope for Homeowners Act, which was introduced by Sen. Chris Dodd and signed into law by President Bush earlier this year. That law, which comes into affect on Oct. 1, allows the Federal Housing Authority to work with HUD-approved lenders to refinance sub-prime mortgages into traditional, 30-year fixed-rate mortgages. If the bailout proposal passes, more homeowners with higher debt burdens will be eligible for the program.
Sprinkled throughout is language requiring Secretary Paulson to work with HUD to avoid foreclosures through other means, as well. But there are few specifics as to how he might do so.
What was lost in the negotiations was a provision, supported by some Democrats, that would have allowed judges to restructure sub-prime mortgages into traditional ones built around an individual's ability to pay. During the Depression, an entire federal agency was created to keep people in their homes through means like this, the Homeowners' Loan Corporation.
--Dana Goldstein