And once again, it’s a swing and a miss, because once again, it’s an attempt to use the carrot on banks, a rather generous payout for principal reductions, along with giving banks an incentive to shovel their most toxic mortgages to the FHA, as opposed to a stick, in the hope that house prices somehow recover.

They won’t ever that is what “post bubble” means.

But once again, Larry Summers^* and His Evil Minions^™bailing out the banks, not the homeowners. The goal is to keep the toxic nature of the mortgages off of the banks’ books.

Little things, like banning prepayment penalties, which lock people into bad mortgages, and allowing mortgages to be modified in bankruptcy (cram down), would give lenders the incentive to deal fairly.

But that’s not gonna happen.

^*But remember, the Cossacks work for the Czar.