The uses of free money

President Obama has a proposal languishing in Congress for Fannie Mae, Freddie Mac and the FHA to underwrite the refinancing of mortgages in order to lower qualifying homeowners’ monthly payments. I haven’t read any account of the scheme that does not make it sound like a Rube Goldberg contraption to be financed in part with with a new “fee” on large banks. The benefit to be delivered by the program is an average saving of $3,000 a year on the mortgage payments of qualifying homeowners. The February 1 New York Times story on the proposal takes it all at face value. Even so, does anyone doubt that deepening and extending federal involvement in the mortgage market at this point is some kind of a bad joke?

Obama was out selling the program (and a laundry list of others) during his stop at a Honeywell facility in Golden Valley on Friday, just before he went downtown Minneapolis for the three fundraising events that brought him to town. In his remarks at Honeywell Obama improvised on the uses of free money for those who might not otherwise understand (video below).

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