Paulson Rejects Government Bailout Plans

If you’ve been hoping that Treasury Secretary Henry Paulson is going to start paying your mortgage out of the kindness of his heart, think again:

Treasury Secretary Henry Paulson said Thursday that many proposals being put forward to deal with the housing slump would do more harm than good.
While he still believes that the housing problem remains the biggest downside risk to the economy, Paulson said the issue needed to be put in perspective. He said 93 percent of all mortgages are being paid on time and that less than 2 percent are in foreclosure.

“So while some in Washington are proposing big interventions, most of the proposals I’ve seen would do more harm than good,” the secretary said in remarks prepared for delivery Thursday night before the Economic Club of Chicago.

At the risk of sounding very Grinch-like, with a cold, shriveled heart, I have to say that I completely agree. With the media beating it’s doom and gloom drum as hard as it can, it’s easy to forget that amidst all the foreclosure talk we’re still only really talking about a tiny, tiny fraction of households and mortgages out there.

Bailout plans may be good for short-term pops in the stock market, but by and large they’re pretty much completely ineffective and more window dressing than anything. Until we get a widespread correction in prices and more transparency as far as the worst being behind us on the lender/debt side of things, any bailout plan that’ll be proposed is pretty much peeing in the wind.