A Rescue of Main Street

In the closing weeks of the election now thankfully concluded, attention focused on the failing economy and a need for the federal government to address the problems quickly and effectively. Amidst passage of the $700 billion bailout legislation, the Bush administration proposed purchase of "toxic mortgages" from major investors as a way to invigorate the economy. As expected, calls for government money emanated from those claiming to represent ordinary citizens, urging assistance for individual homeowners facing foreclosure. This dispute between Wall Street and Main Street remains heated as spokespersons from both sides press their demands.

The latest participant in this controversy is the National Association of Realtors (NAR), whose outgoing president, Dick Gaylord, criticized the U.S. Treasury Department, the overseeing authority, for "focusing too much attention and stimulus money on Wall Street and banks that are in turn using the money for mergers and acquisitions." Not unexpectedly, the NAR prefers that the effort be aimed more toward direct government support for housing. This is but another salvo in what is currently a national contest by every imaginable group to wrest a share of the largesse. With hundreds of billions to be blown, largely by whim, and the $700 billion only a portion, there's no limit to the variety of organizations that will haggle over the loot.

This gets us down to a fundamental question: What is the likelihood that upside down homeowners (those whose mortgage balances exceed the value of their homes) will be among the favored recipients? I believe they'll be out of luck. With no powerful lobbying group truly representing their interests, they are odd man out. In addition, with an estimated 27% of American homeowners now in this predicament, whatever funds remain after allocation to the influential, few dollars remain for these luckless souls. Final result: Wall Street will trounce Main Street.



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