The day after our special master on compensation decided to slash executive pay, the Obama administration decided that it would be a good idea to clamp down on banks while we are at it. The Federal Reserve decided to curb executive pay packages "that encouraged bankers and other executives to take the kinds of reckless risks that contributed to the housing bubble."

The housing bubble came from Washington, not from bank board rooms. It was Washington that told these banks that their future growth would be halted or curtailed if they didn't make sure that pretty much anyone with a pulse that wanted a home loan could get one. It was Washington that set up these extraordinary systems whereby banks could make the loans and then pass of the liability to the American taxpayers. It was WASHINGTON, not the banks, that took the reckless risks.

The Community Reinvestment Act is back ... but disguised as a different animal. This report should scare the tar out of you. From the Hill:

The Obama administration launched a new initiative Monday aimed at supporting affordable mortgages, backed by the federal government.

Several cabinet agencies announced a new program to provide assistance to state housing financing agencies (HFAs), administered in part by the government-run Fannie Mae and Freddie Mac companies.

The U.S. departments of Treasury and Housing and Urban Development (HUD), along with the Federal Housing Finance Agency (FHFA), will allow state financing agencies to issue new bonds, while Freddie and Fannie will provide the state funds with credit lines, which the federal government will backstop.

The program puts the government in the interesting role of using Fannie and Freddie, which were taken into conservatorship last year in the midst of the mortgage crisis, of administering the credit lines to the state agencies.

Administration officials maintained Monday that the program would not mirror those from Fannie Mae and Freddie Mac in the late 1990s that inflated the mortgage market, saying the state agencies would be more judicious about lending to subprime borrowers.

Government does not learn from mistakes. Government and politicians profit from mistakes. Yet another difference between the government and the private sector.

We all know of the disaster that occurred, thanks in large part to the Community Reinvestment Act of the 1970s. This is the brilliant idea that government would require financial institutions to lend to unqualified borrowers. Long story very short ... eventually this policy led to the collapse of Fannie Mae and Freddie Mac and to the economic difficulties we're facing today.

So what is the logic emanating from Washington today? Let's EXPAND the scope and power of the Community Reinvestment Act.

Yesterday, Barney Frank held a hearing on the "Community Reinvestment Modernization Act of 2009." The bill's purpose is "to close the wealth gap in the United States" by increasing "home ownership and small business ownership for low- and moderate-income borrowers and persons of color." And, according to this column by Byron York, "It would also make CRA more explicitly race-based by requiring CRA standards to be applied to minorities, regardless of income, going beyond earlier requirements that applied solely to low- and moderate-income areas."

Here we have the man largely responsible for the disasters we're facing today proposing even more power for his pet agency. Yeah .. that's going to work out real well for all of us. I wonder if Barney still has some boyfriends working out there who might get a career boost from this proposal.

With the anniversary of the collapse of Lehman Brothers, there has been a lot of talk about the current state of our financial system one year later. With Obama's talks on Wall Street, and Barney Frank still banging the drum for more regulation ... let us not forget two extremely important entities that got this bull rolling: Fannie Mae and Freddie Mac.

In fact, here is a little factoid that the mainstream media will probably not tell you. A report from the Government Accountability Office says that "privatizing the government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac could mitigate the systemic economic risk caused by the federal government's guarantees to the now-defunct mortgage giants, but that the benefits of privatization could be reversed by government efforts to insure private-sector mortgages."

Oh no! Not privatize! Where's the government? How is the government to save people? How is the government going to make people more dependent if we privatize?

Republicans on the House Oversight panel are finally getting down to business on what caused the initial housing crisis that led to the collapse of the economy. A new 26-page report highlight's the government's role in trying to increase sub-prime home ownership. Michelle Malkin has some details:

* Political pressure led to the erosion of responsible lending practices: In the early 1990s, Fannie and Freddie began to come under considerable political pressure to lower their underwriting standards, particularly on the size of down payments and the credit quality of borrowers. (p.6)

* Lower down payments led to housing prices that outpaced income growth: Once government-sponsored efforts to decrease down payments spread to the wider market, home prices became increasingly untethered from any kind of demand limited by borrowers' ability to pay. Instead, borrowers could just make smaller down payments and take on higher debt, allowing home prices to continue their unrestrained rise. Some statistics help illustrate how this occurred. Between 2001 and 2006, median home prices increased by an inflation-adjusted 50 percent, yet at the same time Americans' income failed to keep up. (p. 11)

* Members of an "affordable housing" coalition shared profits with political allies to help legitimize their business practices: Fannie Mae created and used The Fannie Mae Foundation to spread millions of dollars around to politically-connected organizations like the Congressional Hispanic Caucus Institute. It also hired well-known academics to give an aura of academic rigor to policy positions favorable to Fannie Mae. One paper coauthored by now-Director of the Office of Management and Budget Peter Orszag, concluded that the chance was minimal that the GSEs were not holding sufficient capital to cover their losses in the event of a severe economic shock. The authors suggested that "the risk to the government from a potential default on GSE debt is effectively zero," and that "the expected cost to the government of providing an explicit government guarantee on $1 trillion in GSE debt is just $2 million." (p.7)

* The Government Sponsored Enterprises led the way into the housing crisis: Fannie Mae and Freddie Mac were leaders in risky mortgage lending. According to an analysis presented to the Committee, between 2002 and 2007, Fannie and Freddie purchased $1.9 trillion of mortgages made to borrowers with credit scores below 660, one of the definitions of "subprime" used by federal banking regulators. This represents over 54% of all such mortgages purchased during those years. (p.24)

What more can you say about Slobbering Barney Frank? I mean, when you strain to understand the guy, you realize that there isn't much point ... his thought process is about as mushy as his syllables.

So Barney was making a speech ... wait, people PAY to hear this guy speak??? Anyway, Barney was making a speech at the National Low Income Housing Coalition. And get this. Barney tried to blame this entire mortgage meltdown on George Bush. I kid you not! Barney said that it was "a Bush-era policy to help low-income families become homeowners instead of renters contributed to the sub-prime mortgage crisis and, ultimately, the larger economic crisis now confronting the country." How blatant! The policy was promoted by Bush, to be sure ... but it originated under Clinton and was promoted by none other than Barney Frank himself!

But don't worry. It's Barney Frank to the rescue! He says, "We will do everything legally possible to preserve every unit of affordable (rental) housing." Yeah. It's the government's job to make sure that people can obtain affordable housing. Amazing stuff, isn't it folks?

Remember ... if you're not part of the parasite class, when you go out there to rent or buy a place to live, find out where these government-subsidized living units are, and get as far away from them as you possibly can. Unless, that is, you enjoy living around criminals and druggies.

Barney Frank has been a fierce defender of Fannie Mae and Freddie Mac .. considering he was sleeping with a Freddie Mac executive when ...... well never mind. I don't want you to lose your breakfast. But he has also when one of the most outspoken (if that is what we can call that mumbo-jumbo coming out of Barney's mouth) critics of these AIG bonuses.

Guess what other companies are gearing up to dole out retention bonuses? Yep, Fannie Mae and Freddie Mac. These are companies that are at the epicenter of our mortgage meltdown. The US Treasury has agreed to give Fannie and Freddie $200 billion a piece in exchange for preferred stock. In 2008, they lost a combined total of about $108 billion.

But wait, Fannie may is going to pay retention bonuses of as much as much $470,000 to $611,000 this year to some of its executives. Freddie is planning to do the same, but we don't yet have the details.

Now I don't know if Barney's ex is still working there ... I think not ... but if he were, you could bet your bottom sheckle that Barney would dummy up on this one.

Barack Obama released details of his plan to help homeowners avoid foreclosure. The good news is I have yet to find a provision that would allow bankruptcy judges to reduce the principal amount due under a mortgage loan. Maybe that's been dumped ... or maybe it comes later and under the radar. As it stands now mortgage modification will occur only if borrowers provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship." In the affidavit, they have to cite the reasons behind their financial woes, like losing a job or some drop in income. Oh and by the way, mortgages for single-family properties that are worth more than $729,750 are excluded from the program. The borrower will also have to show that they exhausted all remedies in personal negotiations with the lender before they will be allowed in the bankruptcy court. That great symbol of government education, Congresswoman Maxine Waters of California, refers to this process as "going through all that mess."

We're told that the Obama administration's housing plan is intended to help 9 million struggling homeowners avoid foreclosure, but it leaves out tens of thousands of borrowers in the most battered housing markets who won't qualify because their homes have lost too much value.

The program detailed Wednesday offers refinanced mortgages or modified loans with lower monthly payments. The refinancing plan is limited to borrowers who owe up to 5 percent more than their home's current value. Loan modifications, supported by $75 billion in federal funding, are unlikely for severely "underwater" borrowers.

Amazing. I'm dumbstruck. There are provisions of this borrower bailout that actually making some sense here. And, yes .. I'll freely admit it when this administration does something even marginally right .. .but I don't expect to be kept busy with this task.

In the California cities of Stockton, Modesto and Merced, more than one out of every 10 homeowners with a mortgage won't qualify for any help because they owe more than 50 percent more than their house's current value, according to data from real-estate Web site Zillow.com. Fine .. turn these people into renters. Works for me. Time for some entrepreneur to go to these cities and build low-rent apartments. Oh, wait. Our country discourages entrepreneurship right now. Looks like Stockton, Modesto and Merced will become Section 8 havens.

The plan doesn't help homeowners in states "that are at the epicenter of the housing debacle," said Greg McBride, a senior financial analyst at Bankrate.com." Cry me a river.

According to a survey released yesterday by Quinnipiac University, 64% of Americans feel that the Obama's mortgage plan is unfair to people who pay their mortgage on time. I guess this means that people who have been paying their mortgages on time and in accordance with their mortgage documents would like to see their payments reduced as well. Typical.

Sometimes I like to read the comments on stories around the Internet. Well I saw a couple from this story that I thought you would enjoy. Just listen to the reasoning of these people ... and remember, they can vote. That would explain why things are the way they are.

This one is from Barbara:

"This is the whole problem with our country, too many greedy people. It's all about "me, me, and me. What about us. We should all be willing to help each other. I am 62 yrs old, work 2 jobs, and barely make ends meet. I am running about 2 weeks behind on my mortgage and can't get caught up. I am charged around $30 extra for my lateness. I had surgery and had to go without pay for 2 weeks and this got me behind. I'm sure this plan won't help me. Let it help people that need it more. . I am not complaining like the rest of you. Having a home means everything to me. If this plan can help people stay in their homes or help them out with their mortgage so they can get caught up., I say "Praise God". Greedy people don't have a clue what it means to do without. Don't judge until you walk a mile in some one else's shoes. God will be pleased that we help each other. Some people have lost their jobs, does that mean they are "DEAD BEATS". Rethink that quote, you may be in the same situation some day."

It would seem that Barbara defines "greedy" as someone who has handled their finances responsibly. Par for the course.

And this one is from Gene /Connie Garvin:

"We should all appreciate what our President is doing for us. He is doing his best to save this country. There are fortunate people that can pay mortgages on time and a lot of people that can't. What is wrong if we help people that are in need. We are all Americans and should stand for each other. President Obama you are the best President and please continue on your mission for America. We appreciate everything you do for us."

So Gene and Connie have a different take. The people who handle their finances properly aren't necessarily "greedy." They're just lucky.

Now ... think we can find someone who will take the heat for the mismanagement of their own finances?

I, for one, won't waste too much time on that.

Some news about two of our favorites .. Fannie Mae and Freddie Mac. The New York Times reports that more than likely, the companies will never fully return to private hands. This is a fact that lawmakers and company executives are starting to realize. Maybe that is why Freddie Mac's CEO just resigned after six months on the job.

One reason sighted is the fact that Fannie and Freddie must repay the taxpayer dollars invested, plus interest in order to become independent once again. Even if they are profitable once again, it could take them more than 100 years to pay back the taxpayers. And that assumes that they start turning a profit - something they aren't expected to do anytime soon.

Many are worried that this is a sign of things to come for another industry in peril: the banking industry. If the government should nationalize some of the large banks .. will they end up in this same situation - as permanent government institutions.

Next up ... the automakers?

Port St. Lucie down on the east coast of Florida has come up with a way to handle its foreclosure crisis .. declare itself a disaster area. Yeah, as if a hurricane of irresponsibility has swept through. Port St. Lucie is apparently the only county in the United States that is considering this option. At least for now. The country commissioner says that this foreclosure crisis is a "manmade disaster."

What would happen if Port St. Lucie declares itself a disaster area? It would be like getting an instant mini-stimulus plan. Government officials would have access to $17.5 million in county funds that are reserved for natural disasters. The government would then go to town, spending money on "shovel-ready" construction projects and try its best to hire local contractors.

If this works in Port St. Lucie, you can bet that other communities will try the same thing. Can you see where this is going? These communities will exhaust their emergency funds on localized political pork projects ... and when the next hurricane or tornado hits there will be no money. Then, of course, they will turn to Washington ... and Washington will turn to you.

Obama released his budget yesterday. Okay, I know it sounds boring, but stick with me. There is a section of the budget entitled "Inheriting a Legacy of Misplaced Priorities." Oh how The Chosen One likes that "inherited" word. For those of us who paid attention while Obama was on the campaign trail, this kind of wealth-envy rhetoric won't come as a shock to you. But now that the American Idol, Entertainment Tonight, YouTube crowd has put this man in charge .. statements like these are now included in our President's federal budget.

"While middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not. They have taken risks and piled on debts that while seemingly profitable in the short-term, have now proven to be dangerous not only for their individual firms but for the economy as a whole. With loosened oversight and weak enforcement from Washington, too many cut corners as they racked up record profits and paid themselves millions of dollars in compensation and bonuses. There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few."

Capitalism is evil. There's nothing wrong with making money .. as long as you don't make more than the government thinks you should make. Just why is it that Obama can never find any government role in any of this? Well .. that's simple. I've said it before ... but Obama is absolutely and completely in love with government. Clearly Obama has no need for the services of a fertility clinic .. but if that were to change they would send him into that little room at the clinic not with a girlie magazine, but with a copy of the Federal Register.

A fist bump to the Tennessee GOP for coming up with this one. Looks like you can buy your own at their website.

The Heritage Foundation has issued a report on Obama's mortgage cramdown bill, officially known as The Helping Families Save Their Homes Act. This is the one that would allow bankruptcy judges to reduce the principal owed on a mortgage. Just call this a wealth transfer from mortgage lenders to irresponsible home buyers. Irresponsible home buyers, it seems, vote Democrat. You know this is a lousy idea, I know it's a lousy idea, Rick Santelli knows it's a lousy idea .. and here comes the Heritage Foundation to assure us that .. yes .. it is a lousy idea. Here are just a few ways they believe this cramdown bill is going to actually hurt the housing market:

Raise mortgage costs. Cramdowns would add additional risk that mortgages will not be repaid as the contract requires. Lenders must charge for that added risk, and experts estimate that the additional costs would raise mortgage rates by as much as two full percentage points or substantially increase required down payments. (This, by the way, is exactly what I was telling you earlier this week). These added costs would fall hardest on moderate-income and first-time homebuyers, who have a higher risk of defaulting on a mortgage. This will price many families out of the housing market. Obama will blame the lenders, and the people who can't buy homes will continue to vote Democrat.

Further undermine the value of mortgage-backed securities. Banks and other investors are already facing heavy losses because mortgage-backed securities have lost much of their value because of uncertainties about whether the mortgages will be paid. The language in H.R. 1106 increases this uncertainty. Investors will be at risk of both foreclosure and cramdowns that reduce the earnings of these securities. Many (if not most) cramdown mortgages will later go into foreclosure. Since investors have no idea what this new provision will do to the value of their securities, prices will drop further.

Fail to help many homeowners. Only one-third of all Chapter 13 filers complete the process successfully and get the fresh start that bankruptcy promises. The other two-thirds "pay court fees, pay attorney's fees, pay fees to the bankruptcy trustee, invest time and money to restructure their financial affairs, and then wind up with nothing more than temporary relief. It is therefore not surprising that a substantial number of Chapter 13 filers--nearly one-third--go on to file for bankruptcy again." Once a deadbeat always a deadbeat. But .. and this is important ... they will continue to vote Democrat. That's because they're ignorant.

This woman is sounding a lot like Hillary Clinton .. we have to get rid of this "me" culture and focus on the "we." Well an author by the name of Alyssa Katz is writing a book about how we got into this mortgage crisis.

I can sum that one up for you pretty quickly: irresponsible homebuyers.

That didn't take long .. but back to this quote from Alyssa Katz. She says, "We have to give up this illusion that it's about you and me. We have to accept, sort of blindly, the notion that we have to do this for the sake of the nation. Whether you're lucky and get aid or you already lost your home and you're screwed, we're all in this together."

Accept "blindly" ... "we are all in this together" .. if you are "lucky" .. these phrases should scare the pants off of you.

This week we are going to see this "cramdown" bill come up for debate. We are probably talking Thursday. But this is the bill that would allow judges to erase or reduce the principal amount of a mortgage for borrowers who file for bankruptcy. In other words ... you buy a house for $225,000. You borrow $200,000 from a third party (individual, bank, mortgage lender .. whatever) to give to the person who sold you the house, along with $25,000 of your own. The third party lender takes a security interest in your home to cover any losses in case you fail to pay them back. Then you go deadbeat and file bankruptcy. The judge then rules that you don't have to pay all of the $200,000 you borrowed from the third party back ... and what's more, the third party cannot rely on their security interest in your home to make themselves whole. Pretty nifty, huh?

Now ... how will the mortgage lenders react to this? Do you know what PMI is? That's private mortgage insurance. When you don't put enough money down on your home the lender may make you pay premiums for PMI. This insurance policy will pay off the lender if you bail on your loan, the lender forecloses, and you home doesn't bring enough at auction to cover the amount you still own the lender. People don't much like paying PMI ... but it has been part of the game if you put less than 20% of the purchase price down. Well, let me introduce you to a derivative of PMI. This may be called PBI. Private bankruptcy insurance. This will be an insurance policy that the lender will take out to cover them in case you go bankrupt and the judge says that you can keep your home and you don't have to pay all of the loan back. Guess who is going to pay the premium for this insurance? That would be you .. another little goodie added to your mortgage payment. Add 'em up. A nice fat little extra added to your monthly payment to cover the lender if they foreclose on you and don't get enough at foreclosure to cover the amount you still owe, and another fat little extra added to your monthly payment for insurance to protect the lender in case you go bankrupt and the judge reduces the balance you owe and lets you keep the house. Either way ... borrowers who fully intend to pay their mortgage and have little likelihood of going bankrupt are going to have to cover part of the tab for the deadbeats out there.

There is another possibility. Maybe the government will make PBI illegal. Then the lenders just hike the interest rates to cover the potential losses from these cramdown provisions. Who knows! Maybe they'll create PBI and hike the interest rates as well! Or maybe they'll just tighten up the credit requirements to the point that if you even give a hint of the smell of someone who might someday go bankrupt you won't be able to get a loan. How could you emit this odor? Credit card balances, instable job history, too much available credit ... there are many ways.

Seems like a good time to be looking into owning apartments and rental homes again.

CNN did a report on all of the poor people who went out and bought houses that were beyond their means .. and now they are expecting the taxpayers to bail them out. Here's the part of the CNN interview with a homeowner in foreclosure:

ACOSTA: Like countless other Americans, Garcia admits she and her husband bought more house than they could afford, but she says the lender made the purchase all too easy. Now her mortgage is worth more than her house.

(on camera): How much was the house when you bought it?

GARCIA: Eight hundred.

ACOSTA: Eight hundred thousand dollars?. And how much is the house worth?

GARCIA: Right now, it's like $675,000 on the market.

Yeah, it's all the lenders fault. This loon over-extended herself and now can't pay the tab .. and it is everyone's fault but hers. Blame someone else and then expect government to come to the rescue. This woman and her husband need to be renters. We have far too many people like Sra. Garcia and her husband with their names on deeds in this country.

Did you happen to catch CNBC's Rick Santelli yesterday? Glorioski! Was that refreshing. Here's the video of Santelli yesterday on the floor of the Chicago Exchange. If you can't watch the video - and you really should -- here's a taste of what he had to say about Obama's home mortgage plan: "The new administration is big on computers and technology - how about this, President and new administration? Why don't you put up a Web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers' mortgages, or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a change to actually prosper down the road and reward people that could carry the water instead of drink the water."

Clearly the market agreed with those sentiments. The Dow Jones tumbled to a six-year low yesterday .. and as I write these notes for today's show the futures index shows another bad day for investors.

President Obama has another grand rescue coming our way. Today he will announce a $50 billion home rescue plan. The goal will be to slow down or prevent more home foreclosures. The plan? Well PrezBo really knows how to present a policy proposal to the American people. Listen to this: He wants to "encourage services and lenders to do the right thing." Eureka! Why didn't anyone else think of this! Problem solved! Just tell the lenders to do the right thing! No wonder we made this guy our leader.

There are some specifics. Obama wants lenders to modify interest rates and payments to make it easier for some homeowners to get back on their feet. OK, that sounds doable --- for borrowers that didn't lie through their teeth to get their loans and who bought their homes with some reasonable expectation of being able to pay for them. For homeowners who had no job history, no credit rating, and who lied about income on their home loan applications ... no deal. They should have been renters ... and renters they should become.

Here's the dangerous part of Barack's plan --- other than the spending of another $50 billion that is. He wants to give bankruptcy judges the power to reduce the principal balances due under some loans. This is nothing less than pure theft.

Until the mortgage market went into the toilet I was a private mortgage lender. I've already had to take one home back from a borrow who was unable (or just refused) to pay. Thankfully I only have one borrower on the brink right now. What would it mean to me if that borrow declared bankruptcy and some bankruptcy judge came along and said (for example) "Mr. Boortz, I'm reducing the principal amount of Mr. Sternfaulter's loan by $50,000." Well, simply put .. this would mean that the judge has just seized $50,000 from me. Taken. Confiscated. Seized. Stolen. Call it what you will .. but $50,000 is gone.

Why are bankruptcy judges now prohibited from reducing the principal amount due under a home loan? That would be because it makes it easier for people to buy homes. Lenders are assured that at least they will get their principal balance back .. through loan repayment, a bankruptcy arrangement or foreclosure. But what happens is lenders can't be assured of at least getting their principal back? They would face bigger potential losses. How do you prepare for increased potential losses? You charge more for your product in order to create a reserve that would cover those loses. How do you do that? Higher interest rates. Higher interest rates would make it more difficult for you to buy a home .. not to mention more expensive.

Great plan, PrezBO.

As this economic downturn continues it occurs to me that the government is going to end up owning a lot of middle-income type homes. Someone is going to come up with the bright idea of converting these homes to Section 8 housing. If one or more of these homes happens to be in your neighborhood .. and if they become Section 8 housing ... you're going to want to figure out a way to get the hell out of that neighborhood while you can. Section 8 housing is welfare housing ... where the taxpayers pay the bulk of the rent for someone who, more likely than not, is a deadbeat. Not the kind of neighborhood you want to live in.

As our economy trudges along, researchers are starting to look back and make sense of it all. One thing we know for sure .. it was the mortgage meltdown that led to this economic crisis. But researchers at the Federal Reserve Bank of New York are now saying that one of the main triggers of the mortgage meltdown was the 2005 bankruptcy reform act. Originally drafted in 1997 and pocket vetoed under President Clinton, it took until 2005 to get the darn thing passed, after years of lobbying from the credit card industry.

Basically, this legislation shifted the burden of risk from credit card lenders to mortgage lenders, which inevitably led to a surge in home foreclosures. You see, before the law was passed, households could erase any unsecured debts by filing for Chapter 7 liquidation. This would give them enough disposable income to use to make mortgage payment. But the new law forced "better-off households" to file Chapter 13 if seeking bankruptcy protection, which would require them to continue paying unsecured lenders.

So people who before could have saved their homes by filing Chapter 7 were now much more likely to face foreclosure because they would be forced to file Chapter 13. The law's original intent seems to be to trap high-income debtors from abusing bankruptcy .. but instead, it hurt "ordinary American families in serious financial distress." Yeah ... it hurt them by forcing them to try to figure out a way to pay their bills. Oh, the humanity!

From my experience practicing law I can tell you that under the old law someone would be allowed to run up $40,000 or more of credit card debt, waltz into bankruptcy court, promise to pay those credit card debts off at 5 cents on the dollar, and a bankruptcy judge would rule that the debtor was making a "good faith effort" to satisfy his obligations. What a joke.

The conclusion from these researches at the Federal Reserve Bank is that the new law increased the number of people who were defaulting on mortgages or just walking away from their homes, rather than seeking bankruptcy protection.

Here's a clearer picture of what was going on. Ten years ago I owned quite a few rental homes. Someone would come along to look at the house. I would tell them the rent was, for example, $1,500 a month and that I required a $500 deposit. They would then tell me that I was out of my mind because they could go down the street and buy pretty much the same house with no money down, no closing costs, and with their adjustable rate mortgage their payments would be lower than what I was asking in rent! So ... I sold my rental homes. Bottom line? Those people who went for their no money down, no closing costs, adjustable rate mortgaged homes were not cut out to be home owners. They were renters, pure and simple. These are the people that defaulted on those loans when the payments started going on ... and here we are today.

Now ... doesn't that make so much more sense than blaming this on bankruptcy courts forcing people to pay their bills? Yeah, I thought so.

People are up in arms about home foreclosures around the country. Politicians are saying that the government needs to do more to help people refinance and prevent foreclosures. Ben Bernanke, just the other day, laid out some plans to help distressed homeowners refinance into more affordable, federally insured mortgages through the "Hope for Homeowners" program.

Now get this .. recent data suggests that many of the borrows who have received help refinancing their mortgages earlier this year are re-defaulting on their payments. Aren't you shocked? A top US bank regulator says, "Put simply, it shows that over half of mortgage modifications seemed not to be working after six months."

The data found that after three months, 36% of borrowers who restructured their mortgages re-defaulted. After six months, the rate of people re-defaulting jumped to 53%. And after eight months, almost 60% of restructured mortgages had re-defaulted.

These are people who should never have owned a home in the first place. They aren't programmed to be owners; they're renters through and through. They don't have the sense of responsibility or maturity to deal with the intricacies of home ownership. If these people were in apartments I guarantee you that they would be consistently late on their rent ... begging to the property manager month after month to just give them another week to come up with the money. In the meantime they would make sure they had the latest wireless device and their rug rats had all the proper video games. Priority number one would be a new flat-screen so that they can really get a good look at Entertainment Tonight and the lottery drawings every evening.

Let's just get it over with. Foreclose on these people and send them to some apartment rental agency.

Durned deadbeats.

This whole financial crisis started with the mortgage meltdown. And for that you can thank the policies of the Clinton era, pushing for more Americans to have the American Dream. Now we are paying the price for that dream ... the total outstanding balance for all US mortgages that have been incorporated into mortgage-backed securities is $6.6 trillion. Just a little bigger than $700 billion, don't ya think?

These outstanding balances account for 59% of all money that Americans owe on home mortgages. Fannie Mae and Freddie Mac processed $4.6 trillion of the $6.6 trillion. So even if the entire bailout package - all $700 billion of it - had been used to buy back mortgage assets, we would still have a long ways to go. That's $5.9 trillion ways to go.