So the government (via its new version of the RTC) becomes the mortgage holder for hundreds of thousands of Americans. Already the cry from Democrats is "People before profit."Jonah Goldberg points out:
Will the US be able to resolve the most clear out the very worst of these loans in an fiscally responsible manner?
If there is any possibility of making money on these loans, won't that cause an outcry on the Left?
Democrats in Congress had great fun using Fannie and Freddie as public policy piggy banks, rewarding constituencies, funding pet projects, forcing the private sector to dance to their tune. What’s to stop them from renegotiating this week’s deal after the election and using Bank of America, Wells Fargo, JPMorgan Chase and the others as Fannie Mae 2.0?I never thought of that.
Please don’t say that the terms of the deal are set and the government can’t revise them. If there’s one thing the last month has hammered home, it’s that nothing is written in stone. Besides, the banks may grow to like the security of partial nationalization and even lobby to Congress to stay on as less-than-fully-silent partners.
Heck, that way they wouldn’t have to pay back the loans.
Banks might tout the participation of the government as a way to sell their stock, "Hey, the government won't let us fail!"