There aren't many people who would take that idea very seriously just now, at least not many people other than those who control the NYT oped page. The page published a column by Howard Millstein the "chairman and chief executive of New York Private Bank and Trust, which owns a significant share of stock in The New York Times Company," suggesting that the federal government should guarantee the principle and interest on subprime loans, for 15 years in exchange for banks leaving the teaser rates in effect. This bails out banks on many loans that are now virtually worthless. In many cases, the loans issued by banks were fraudulent. In these cases, the extended teaser rate is a meaningless concession. The taxpayers are just handing money to Merrill Lynch and Citigroup. The extended teaser rate also will not help many homeowners who still can't make ends meet paying the mortgage on a home bought at a bubble inflated price. It also does nothing to help strapped homeowners who were smart enough to take out fixed rate mortgages. There are much better ways to target relief to moderate income homeowners without giving a massive bailout to the banks.
--Dean Baker
