U.S. Treasury Secretary Hank Paulson was just interviewed by George Stephanopoulos on ABC's "This Week." One of the most amazing, at least to me, things he said was in answer to Stephanopoulos' queries about foreclosure relief. He was asked what the American public would get in return for the billions of taxpayer dollars being given to the banks? Could individual Americans facing home foreclosure receive any relief as part of this package?
In reply the Treasury secretary said that the vast majority of Americans facing foreclosure were in that position because they had bought more house than they could afford. Although they paid more for the house than it is now worth that, according to the secretary, is not why they are facing foreclosure. Although they got a higher interest loan, a variable rate loan, a balloon loan that was not the best loan then available that, according to the secretary, has nothing to do with it. Nothing could possibly be done to keep them in their homes because, even if as part of this package they were refinanced at the current market value of their house with a 30 year mortgage at a fixed rate that is the best now available for them, they could not make those payments because they simply bought more house than they could afford. The housing bubble had nothing to do with it. The fact that loan agents were incentivized to steer borrowers to higher rate, variable rate, riskier loans had nothing to do with it.
Do you find that believable?