February 01, 2008

Calling Bullshit : Hope Now

Apparently, I wasn't the only who thought Bush and Paulson's little plan to 'cure' the mortgage market in the US was a load of horseshit...

So what exactly does Hope Now do for the market? We think there is not much more to it than a 1-800 number for consumers.

We wonder why this led Paulson, a legendary Wall Street insider, to even think about doing this. First, he is a Republican, so we are not sure how he can justify his intrusion into market activities – however nominal it might be – with his political stance. (Bush has long ago stopped being a Republican in the classic sense.)

And even if he has some noble objective in mind, the numbers don’t justify the harm to his reputation, especially on Wall Street. All this for perhaps 1.2 million borrowers, many of whom would have gotten relief from servicers anyway? This seems like a bad trade for the former chairman of Goldman Sachs & Co.

The administration is painting this as an industry-led effort. The government is simply facilitating it. Facilitating what? The fact that servicers can, if they want to, modify loans upon reset? Of course they can. Loan modifications are spelled out in servicing agreements.

This, my friends, is politics – and it is hollow politics at that. When Paulson came to office, we thought he would be a Treasury secretary of substance. That Hope Now is just an empty shell.

Oh, and don't forget, when you call the 800 number, please don't call the one Connecticut native George Bush is giving out.

Posted by mcblogger at February 1, 2008 02:30 PM

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