Over on another thread, a staunch Republican is explaining why I'm indulging in class warfare when I suggest that the government bail out homeowners instead of the people who own their loans. So it is good to read the following:

"This spring, she said the Treasury Department should make available some $50 billion in interest-free direct loans. Borrowers stuck in adjustable-rate mortgages could use the cash to pay down 20 percent of their loan principal, and lenders would restructure the remaining debt into fixed-rate loans. "We're making loans to everybody else," she said, referring to the credit that taxpayers have extended to Bear Stearns and to Fannie Mae and Freddie Mac."

Functionally it is the same thing--the government/taxpayer is providing the money for the bail out, the lenders get relief (because if the lender is upside down, they now have equity in the home and don't walk away, the borrowers get relief (and hold on to their property.) The only difference is that there is a LOT more paper work.

This is a pretty simple and obvious concept. The class warfare comment comes from your politicizing the lender vs borrower approach. I am arguing for less bureaucracy... do you have a compelling reason for making the loans directly? My concern is that it will be one more poorly administered Federal aid program.

I live in an area of the country that has had severe flooding this summer, and we have been declared an area of natural disaster. From talking to my clients, FEMA has been extremely arbitrary about giving out assistance. Would the Treasury be more discriminating? Maybe, maybe not.