The Bailout's Skeleton

From ABC:

1) a panel to conduct oversight of how the vast sums of taxpayer cash are spent;
2) taxpayer protections -- a way for taxpayers to receive some equity, through warrants, in the companies receiving government aid;
3) limits on executive compensation for officers of the companies receiving government aid -- regarding golden parachutes, bonuses based on erroneous earnings (or 'clawback'), and tax deductions for bonuses;
4) but a source tells ABC News that there was a problem resolving the issue of how to help homeowners facing foreclosure. Democrats want to re-write bankruptcy laws to enable judges to re-negotiate mortgages; Republicans do not.

A Democratic source says that Sen. Judd Gregg, R-NH, ranking Republican on the Senate Budget Committee, and Sen. Bob Bennett, R-Utah, the No. 2 Republican on the Senate Banking Committee, advocated for the Bush administration's argument that the bill needs to passed as quickly and as cleanly as possible.

No, number 4 should not happen. I don't want the whole thing to happen, but certainly not the latter.

What strikes me as odd is that the people most likely to declare bankruptcy and then seek to renegotiate those mortgages are the very people that Democrats wanted to get mortgages, i.e. those "diversity" mortgage recipients who would probably not otherwise qualify for credit. So not only have Democrats given these people an improper way into homeownership other than being a good credit risk, but now we are going to force mortgage companies to accept mortgage terms that add to the risk of these high risk mortgages. The inevitable result--no risk taking by mortgage lenders.