Thanks Paulson, you can have it all in real estate

[Quality_is_job_one]

"I just wanted to give a little DC insight on the bail out
announcement from this week. Now I am hardly a DC insider, but I can
see politics affect things at work on occasion.

"Oddly enough, the immediate pressure of politics doesn't usually
change much of the substance of what happens (remember I am not in the
legislative branch - that may be much different). When a scandal broke
in the papers about something that my office regulates, we didn't
completely shift gears. We went back to see if what we already had in
the pipeline would help. We documented how it would help. And believe
me, a bit of what we were planning got into some higher level speeches
than it otherwise would have.

"You have to look at what was announced in this light. There was
already pressure on the lenders/investors to allow modification of
loans to prevent some foreclosures. It was a little political and a
lot public opinion. They needed to do at least a little so they would
have something to announce to the public to not look like complete
bastards. And they needed to do something to keep a law from being
passed. Even a law being written up and proposed would have cost them
a small fortune in lobbying fees to kill, so cutting this off at the
pass was important.

"I am sure the administration wanted to keep anything from happening
in Congress too. Proposing a small compromise and declaring it a
solution to a big problem is something this administration has done
before (think stem cell research) and it worked for them. Also, this
president is a little obsessed with symbols of leadership.

"So, you have private companies planning to allow a few workouts on a
piecemeal basis anyway, an administration that wants to "lead" but
also wants to cut off the chance of a really big proposal from
Congress.

"Enter Secretary Paulson.

"He puts together a coalition of lenders and tells them to hash out
the standards they would be willing to implement for stalling on ARM
resets. Exactly what they would have been doing on their own anyway,
but all together so no one gets dinged for not doing as much as the
next guy. They hash it out a bit quicker than they otherwise would
have. And Paulson gets the credit. The president makes the official
announcement, but he is really very distanced from this. It has all
been sold as Paulson's doing. I'm sure it was. But if it was something
that everyone loved, the president would have been seen as closer to
it.

"Because they all had to agree to it, I bet this is a little less
generous to the FBs than some of them would have come up with
themselves (more generous than others), though it is probably
happening more quickly than they would have managed. I don't see this
as the start of some avalanche of more and more help for FBs. This is
about all they are going to get under this administration. A
democratic president and congress might have tried to do more, but
they would have found it very difficult to pull it off - pay as you go
being the biggest block and they are very fond of that since it
distances them from the current administration.

"And the negative reaction that a lot of the media is reporting isn't
going to inspire any more big efforts.

"Just trying to calm down some of the frazzled nerves around here."

-from www.thehousingbubbleblog.com -