In response to a housing meltdown caused in part by 1) loose lending standards, 2) shenanigans at Fannie Mae and Freddie Mac, and 3) perverse financial incentives, President Obama proposes.(The Week)(Barack Obama)(Brief article)

In response to a housing meltdown caused in part by 1) loose lending standards, 2) shenanigans at Fannie Mae and Freddie Mac, and 3) perverse financial incentives, President Obama proposes to: 1) loosen lending standards, enabling homeowners to refinance mortgages that exceed the value of their homes, 2) shore up Fannie Mae and Freddie Mac with $400 billion in fresh capital, and 3) create new perverse incentives by offering lenders thousands of dollars in government handouts for each mortgage they refinance. Obama argues that this last policy will prevent foreclosures in numbers sufficient to arrest the slide in real-estate prices, but foreclosures are only one wound in that bleeding market. The other factors are arguably more meaningful and less tractable: Houses were overvalued to start with; there is a glut of supply on the market; ...