There's a phrase that has grown in popularity and use over the last year or so, "privatize profits and socialize losses." It's not used in a positive manner. The thinking is something like this. Everyone is happy to let markets roam free when they are going up and many are making a killing, but when prices drop and losses mount, government intervention appears. Recently, the phrase has been applied to Bear Stearns, Fannie Mae, Freddie Mac, and now Homeowners facing foreclosure.
After reversing course on his promise to veto earlier proposed housing bailout bills, President Bush made good on his vow made last week to sign the latest version passed by Congress. With unusual expediency, the bill flew through both the House and Senate and was signed into law today.
Americans seem split on their support for a government sponsored housing bailout. According to a Gallup Poll in March, as reported in the USA Today, 56% supported government aid to borrowers; 42% opposed it. In another poll, 53% oppose government intervention, 29% favor federal aid, and 17% were not sure. Either way, it appears to be a hot button issue for many. The media remain focused on the sad stories of people losing their houses, while those opposing a bailout have been highly vocal, even starting a web site specifically for this issue.
My personal belief is that markets will run their course in a more efficient manner than government intervention. But if price volatility is a concern, then upside volatility is just as concerning as downside volatility.
One of the rules of business is that you shouldn't talk politics in the office. Since this is a company blog, it's pretty much the same thing. So, I'll refrain from further politicizing. Actually, the reason for this post is to bring to everyone's attention what is actually in this bill and how it may affect our clients and other interested parties.
Continue reading "The Great Safety Net of 2008 (aka Housing Bill) Signed Into Law" »





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