Subprime Rescue Plans: Backdoor Bank Bailouts

Publication Date:

Publisher: Center for Economic and Policy Research

Author(s): Dean Baker

Research Area: Social conditions

Keywords: Subprime mortgages; Home ownership; Recession

Type: Report

Coverage: United States

Abstract:

This report analyzes recent proposals suggesting that the government buy up or guarantee bad mortgage debt in an attempt to slow the increasing number of foreclosures the nation has seen in the wake of the housing market's meltdown. The study, which focuses on the plan put forth by the Office Thrift Supervision, shows that banks and mortgage holders end up being the true beneficiaries of such plans at the expense of taxpayers and with few gains for the majority of homeowners currently facing foreclosure.