Up to $739 billion in mortgages are at “moderate to high risk” of default

But don’t call it a bailout. John McCain can claim economic ignorance (and he’s right) but it was the GOP who ushered in this era of laissez faire economics. This is precisely what he wants to do to the US health care system, as if this would somehow help. Now that the banks have lost billions, guess who is running to Congress, asking for help? Wall Street is sending hordes of lobbyists to set up a tax payer bailout to the industry. Wall Street got themselves into this problem, let them dig themselves out of it on their own dollar. Unless they want a loan at very advantageous rates to taxpayers they can go to hell. We can consider this a subprime loan and charge the banks accordingly. Even so, it’s all just too risky.

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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