As Banks are apparently lining up at the cliff's edge to fall into the chasm of defaulted sub-prime mortgages and unpaid loans the Treasury Department as arrived - a Knight atop his Noble Steed, the Congress at the call of the noble King, George W Bush, the Treasury will dole out approximately $300 Billion (yes, that is US Dollars) to rescue Fannie Mae and Freddie Mac. Aunt Fannie and Uncle Freddie are just too important to lose.. they are close to all of our hearts..
Now, wait a second.. did someone just say THREE HUNDRED BILLION DOLLARS? Yup, actually the Treasury will be authorized to use unlimited funds to keep the two giants afloat according to a plan that has passed the House of Representatives, waiting for Senate approval - which is very probable, and President Bush has promised to sign. So, how did the $300 Billion dollar figure come up? It is just an estimate generated by the Congressional Budget Office.
You are probably thinking.. well there must be SOME kind of maximum or cap to their ability to "save" failed banks. There isn't. All that we have to go on is a "Trust Me!" from Treasury Secretary Henry Paulson and a "Go Get 'Em Tiger!" from the Democratic leadership in Congress. That makes me nervous.. VERY nervous.
The bill that was passed in the House is over 700 pages! The Bill (which after a little digging seems to be H.R.3221) is wide-ranging and is riddled with flowery ambiguous language, problems - for average citizens, bailouts - for banks, rules-changes, and huge latitude for the Treasury Department to "fix" the problem. The bill is very expansive and seems to not be very well-researched or thought out. Example: The bill would allow the government to extend mortgage loans and it allows state governments to buy up foreclosed properties. This will help lenders who would basically get full (or inflated) payments from the government during this time of recession while the families forced out of housing.. get nothing. Furthermore, the Bill creates a slippery slope that opens the door for other banks who are failing (and even those who are not) to get money to stay afloat even with their unfair practices and idiotic sub-prime loans. The flaws to this Bill are so numerous that it really boggles the mind how a Congress would be so irresponsible in an effort to just so it can say it is doing 'something'. How Despicable.
Please call your Senator and encourage them to not this broken irresponsible bill. The Senate Bill name (it apparently does not have a number yet) is "American Housing Rescue and Foreclosure Prevention Act of 2008." I know, I know.. hard to be opposed to a Bill with a name like that.. but Titles are deceiving. If you don't know your Senator's office phone number simply call (202) 224-3121 and the Capitol switchboard operator will transfer you to the correct office. Please report back here on what your Senators think of this bill!
Link: House OKs mortgage rescue - CNN Money
Link: Text and Status of H.R.3221 - Thomas.loc.gov, the Library of Congress website