Originally Posted by Villages Kahuna

Freddie and Fannie insure a huge percentage of the mortgage loans made in the U.S. Recently, I read that they insure around 90% of all the mortgage loans outstanding. So the criticism of President Obama in seeking additional federal funding for the two quasi-government agencies is somewhat misplaced. If approved, it actually would support a huge percentage of the loans outstanding.

Maybe a better question might be, is continuing and supporting the guarantees issued by Freddie and Fannie the best way to address the current underwater mortgage crisis? The crisis will not and cannot be solved until all the mortgage loans which are in default or near default are written off by the lenders or guarantors and replaced with new loans. That step alone would revitalize our economy, provide an instant and permanent "stimulus" as it were.

Why not do that? Because it would favor those who were irresponsible in borrowing more than they should have over more responsible borrowers. If you think the argument over Obamacare was intense, consider what would happen if that were proposed as legislation. And the argument over how such a decision would again benefit the banks and investment banks would be uproarious. But in the end, that's the only way that our economy can be permanently and properly stimulated into recovery. It wouldn't be "fair". But it surely would work. And it might be cheaper in terms of taxpayer dollars than any of the economic stimulus ideas that have been tried and are now being considered.