..er ..you mean they were forced to take money after the executives flew down to Washington to beg for money? Maybe I get a different news feed than you.

It’s the mortgage economy stupid! It’s still the mortgage economy stupid! MANDATE creditworthy and sensible incentivized mortgage lending by all TARP beneficiaries. Encourage the competitive neighborhood banks with mortgage stimulus incentives to expand their mortgage activity, when the major banks sit on taxpayer TARP largesse.

Why is the mortgage rate so high with the huge Fed Funds rate cuts and the massive Trillion Dollar infusions of the Fed/Treasury? Simple! Greed of the perpetrators of the credit crisis has not abated. These greedy WS/big bank genius’ don’t get it or don’t care about the economy or anything other than their own self interest.

WS/banks take the tens of Billion dollars of the taxpayers money, courtesy of former WS’er Paulson, to buy depressed priced good banks that provided responsible mortgages. Lining their future pockets with a “Buy low with taxpayer low cost money and sell high later” strategy. Shamelessly, they avoid prudent mortgage lending to responsible taxpayers.

Brainless, amoral greed is this “self-destructive” greed. Take the Money and Run, Give Nothing Back.

When the avarice of banks didn’t want to give the credit worthy fully scrutinized responsible mortgages, the Fed should have encourage the prudent banks (many of the smaller Hudson City etc.) to get much more involved, even with temporary Treasury subsidies.

Analyse the Credit Crisis

Lowering the mortgage rate for the creditworthy, reduces house inventory, price deterioration and foreclosure rates, lowers all bank write downs including CDS’s the main causes of the credit crunch.

Cure the highly infectious mortgage market! Force medicine directed at the infection, a mortgage problem resolving stimulus, and the credit market will heal.

Consider that a 1.5% lower mortgage rate on a $ 200,000 mortgage if totally subsidized for three years on TWO MILLION HOMES would cost/save $ 16 Billion over 3 years. A 1.5%, 1.0%, .5% subsidized lower rate over the first 3 years would benefit THREE MILLION HOMES at $ 16 Billion. Expanded comparable 2-4 sized mortgage stimulus variants are practical.

Variants should be broad based, include temporary (1-3 years as appropriate) aid to mitigate foreclosures of creditworthy and for ARM resets for creditworthy. Select aid for jumbo and second homes. Extra aid for the highly depressed housing markets. The key is creditworthy.

Consider the 2008 Economic Stimulus I cost $150 Billion and did virtually nothing. Compare that to the obvious effects of a $30-60 Billion mortgage stimulus.

Ten months ago, mortgage rates should have been up to 3.0% lower level with the temporary 1.5% mortgage resolving stimulus, preventing the financial crisis we now face. The creditworthy are not ignorant and will not subsidize the banks greed of usurping the entirety of the Fed funds rate reductions for their self interests.

It is not a great surprise that current new mortgages are down 20% when rates are almost 6.5%, when they should be and will be 5% or less without a mortgage stimulus. The creditworthy will wait and the American economy will deteriorate further. Thank you Paulson, Bernanke, Bair and WS and major Banks!

JUST IMAGINE, how the cascade of events in mortgages if reversed over the last 10 11 months would have unfolded.

It doesn’t take a WS genius to comprehend that if homes were more affordable from lower mortgage rates, than housing inventory would be reduced, housing prices would be less depressed and necessary bank write downs would be very much reduced and the financial crisis much less severe.

These positive impacts of a more normal housing market would transfer to all aspects of the economy from a more positive consumer, to a vastly improved stock market.

The mortgage stimulus would directly improve those most severely impacted, employment in housing construction, real estate, home furnishings and even WS.

A more positive consumer would stimulate the retail, hard goods and auto industries etc, curbing job loses and adding a few more bricks in rebuilding the house of economic confidence.

The “Year Too Late” Solution

Economic Stimulus II, if enacted must contain a mortgage resolving stimulus of $ 40-60 Billion.

We must stop giving the economy a daily dose of two aspirin and a swig of Pepto Bismol for the headache and upset stomach. It’s an infection stupid. While the economic symptoms ameliorate slightly, the infection is growing toward a deadly sepsis status that has pushed the patient into a coma. Doctors Bernanke, Paulson and Bair, it’s a deadly infection!

Give the comatose economy a ventilator and IV garamycin, the aspirin and Pepto have no symptomatic relief for the comatose.

It’s the mortgage economy stupid! It’s still the mortgage economy stupid! MANDATE creditworthy and sensible mortgage lending for all TARP beneficiaries.