The Politics Of Refinance

From the Concordia Sentinel:

At the heart of the problem sits Fannie Mae and Freddie Mac, quasi-government mortgage companies that gobbled up sub-prime loans, utilizing the good faith — and credit — of America's taxpayers. Fannie Mae and Freddie Mac sold those "bundles" of sub-prime mortgages on Wall Street where historically strong financial firms awaited the opportunity to make big money by buying the securities and reaping the benefits for years. Real estate values leveled off. In some cases, real estate values slumped, creating an "upside down" scenario in home values versus the money owed on mortgages. Meanwhile, the economy cooled off, too. It remains a mess because Congress cannot reach an agreement on what to do, if anything, to give Wall Street some breathing room on the credit front. In time, consumers who possess A-plus credit ratings will be affected as well, encountering situations where even their hometown banks will deny them loans simply because the banks do not have the money, or credit, to lend.

Sticking points, or issues that prompted Congress to say no to the $700 billion plan, included disagreements over capping compensation packages for CEOs of Wall Street firms. More important, many Republican members of the House, and some Democrats, too, vehemently objected to the government assuming ownership in the Wall Street firms that agree to participate in the bailout plan.