Mortgages and Student Loans: Two Massive Redistribution Efforts
The second plan, as financial industry analyst Tom Brown explains, is to force lenders who own mortgage backed securities to accept lower rates on their securities even if the loan-to-values on the loans are way north of 100%. That's right - all mortgage holders are going to be screwed.
In the long term, meanwhile, this crazy auto-refi scheme will surely drive capital out of the mortgage market. The government’s essentially rigging the system in order to transfer wealth from lenders to borrowers. Wouldn’t that give you pause? The credit markets have already seen what this White House did to Chrysler’s secured creditors during the auto bailout, remember, and must understand it’s willing to give mortgage investors the same sort of treatment. Who’d blame them for demanding higher returns?
So, with millions of layoffs in the financial industry because of new regulations, there will likely be more now because they are going to have to cut costs further from more revenue losses. (That's right - don't get too excited about today's stock market rally.)
As for Obama, he's trying to buy votes with taxpayer dollars, which is his usual template. Worse, he is not even bothering to seek Congressional approval for any of this. He's simply using dictatorial fiat.