The Mortgage Deal with the Devil

prospect.org — The long-awaited mortgage deal between the federal government, 49 state attorneys general, and five big banks that was announced Thursday is pretty thin gruel, but it could have been a lot worse. The Obama administration dearly wanted this deal so that it could demonstrate greater help for homeowners and, in turn, relieve the damaging impact of the housing collapse on the economic recovery. The administration’s main programs to date, the Home Affordable Mortgage Program and later the Home Affordable Refinance Program have been notable failures because they were voluntary to the banks. The actual relief under this latest deal is a drop in the bucket measured against the $700 billion by which mortgages are underwater. The best thing that can be said for the deal is that it could be a down payment for much deeper homeowner relief, if state attorneys general and the newly activated federal prosecutorial task force get serious about bigger criminal and civil suits against banks.

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