Quote Originally Posted by maladroit
the way that it is different is that mccain intends to use taxpayer's money to buy individual mortgages, and then renegotiate the mortgages down to market value, and reissue the mortgage at a lower rate, leaving taxpayers to absorb the loss...fannie and freddie bought pooled mortgage backed securities from banks (which contained a ?? percentage of bad loans) in exchange for cash which the banks used to issue more bad mortgages...fannie and freddie were protecting the banks, not the individual distressed homeowners - they still lost their homes even though the banks got their mortgage money

until recently, fannie and freddie were government sponsored, not government owned, and they were legislated to guarantee the mortgage backed securities with their own private assets...the bush administration nationalized fannie and freddie (SOCIALISM!) and now the taxpayer is on the hook for whatever that is going to cost to protect the banks by intentionally buying mortgage backed securities that the invisible hand of the free markets wouldn't touch with a ten foot pole...mccain's plan protects the banks AND the individual homeowners by forcing the taxpayer to eat the difference in market value

privatize the profits, and pass the losses onto the taxpayer...it's a sweet deal!

at least that's the way i understand it...it might mean something entirely different after the flip-floppers and spinners finish massaging it into a final product
This is basically how I understand it too. The government buys the bad loan from the bank so that the bank does not take the loss. Then the government renegotiates the loan principal down to current market value for the house, meaning the taxpayers absorb the loss in value of the house. The homeowner who bought the house that dropped in value does not take the loss. The bank who accepted the house as collateral does not take the loss. They both get off the hook, and the taxpayer takes the loss.

It s a great deal for people whose houses dropped in value and for banks, but it is going to cost $300 billion according to McCain.
dragonrider Reviewed by dragonrider on . Obama / McCain Second Presidential Debate -- Belmont University Here is the second presidential debate from Belmont University in Nashville, Tennessee: http://www.youtube.com/watch?v=HaBiVJtZc00 Rating: 5