So for once the Bush regime has taken the lead in dealing with a major social issue? Nah, they're just trying to preempt real efforts to deal with it

"You might say that the Paulson plan is better than nothing. But the relevant alternative isn't nothing; it's a plan that--like Barney Frank's proposal--would actually help working families. And that's what the administration is trying to avoid."
--Paul Krugman, in his NYT column today, "Henry Paulson's Priorities"

You might think that for once the Bush regime, in pushing through Treasury Secretary Henry Paulson's plan to deal with the foreclosure crisis resulting from the collapse of the subprime loan market, is actually trying to cope with a pressing social problem. In which case you would be just about 100 percent wrong, but you would be thinking just what the regime finaglers hope.

As Paul Krugman writes today:

In fact, there's a growing consensus among financial observers that the Paulson plan isn't mainly intended to achieve real results. The point is, instead, to create the appearance of action, thereby undercutting political support for actual attempts to help families in trouble.

In particular, the Paulson plan is probably an attempt to take the wind out of Barney Frank's sails. Mr. Frank, the Democratic chairman of the House Financial Services Committee, has sponsored legislation that would give judges in bankruptcy cases the ability to rewrite mortgage loan terms. But "Bankers Hope Bush Subprime Plan Will Scuttle House Bill," as a headline in CongressDaily put it.

Krugman quotes Elizabeth Warren of Harvard saying, "The administration's subprime mortgage plan is the bank lobby's dream." "Given the Bush record," he adds, "that should come as no surprise.

He argues that the regime scheme will do nothing to restore the country's financial stability, which has taken such a hit from the crisis. And in practical terms, the scheme is designed to provide a modicum of relief to investors and virtually none to actual mortgage borrowers in danger of losing their homes.

Shut out in particular are the large number of borrowers victimized by the predatory lending practices that flourished in the now-burst housing bubble.

And what about people with good credit who were misled into bad mortgage deals, who should have been steered to loans with better terms? They get nothing: the Paulson plan specifically excludes borrowers with good credit scores. In fact, the plan actually provides an incentive for some people to miss debt payments, because that would make them look like bad credit risks and eligible for relief.

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