Subprime Rescue Plans: Backdoor Bank Bailouts

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March 2008, Dean Baker

This report analyzes recent proposals suggesting that the government buy up or guarantee bad mortgage debt in an attempt to slow the increasing number of foreclosures the nation has seen in the wake of the housing market's meltdown. The study, which focuses on the plan put forth by the Office Thrift Supervision, shows that banks and mortgage holders end up being the true beneficiaries of such plans at the expense of taxpayers and with few gains for the majority of homeowners currently facing foreclosure.

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