News on Reuters today tells of a new plan set forth by the Bush administration that will hopefully allow many homeowners facing foreclosure to get a little well needed relief.  Aimed at home owners who owe more on their homes than the house is worth, it  would mark the first time the White House has committed federal dollars to help troubled Main Street.  The new plan would allow the FHA to encourage lenders to forgive a portion of these loans and issue new, smaller loans in exchange for the backing of the U.S. government.  All this comes on the heels of the Bear Stearns bailout and the window opening for bankers to borrow from the Fed.  According to the NBS Nightly News this week, banks have taken advantage of this at $37 billion and rising.  Two leading Democratic lawmakers, Sen. Christopher Dodd, chairman of the Senate Banking Committee, and Rep. Barney Frank, chairman of the House Financial Services Committee, have also proposed plans that will likely see veto if they are passed.  Frank’s legislation reveals a provision to spend $10 billion buying vacant foreclosed homes.
Democrats are saying that the current administration has been more concerned about bailing out big investments banks than helping the average Joe on Main Street.  This consensus is quite popular right now in the blogosphere.  There is a lot of fear that the current mortgage situation would push the economy into a deep recession.  The NBC News tonight gave out figures that say 86% of Americans feel we are already in recession, regardless of what the Fed says.  And with those kind of numbers, it is a self fulfilling prophecy, because with no confidence, dollars stay in pockets and don’t enter the economy, furthering worsening the way things are.

The opinion is that this kind of legislation angers many conservatives, who feel it is nothing more than a bailout for the American public.  No matter how you cut the pie, if something isn’t done, regardless of how conservatives and like-minded people think, the economy will suffer.  Right now it is the last thing this country needs.  If the Fed can bail out large investment banks, they can drop a few billion to help homeowners with their issues.  And that, I think, will give consumers more confidence, and help get the ball rolling again, regardless of conservative opinion. Power to the people, anyone?