Enough To Just Pay Off Everyone’s Mortgage

According to Bloomberg.com, if you count the guarantees we are liable for, the federal government is making a financial commitment big enough to pay off over 90% of the nation’s mortgages:

The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC.

The Bloomberg article is overstated, of course, since we surely won’t have to pay out all of those guarantees. Still, it puts the government intervention into perspective.

Notice that we have two separate programs trying to fix the economy: a bailout for our financial sector; and a stimulus package to get money circulating. Again, I’m not sure that either is addressing the problem that was the catalyst for the current collapse; namely, the mortgage crisis.

I am NOT recommending that the government pay off everyone’s mortgage. This article just shows the scale of the government’s commitments while also suggesting that they are missing the fundamental issue. Can you think of anything that might help in the housing sector?