A story in the Wall Street Journal about the New York Fed holding mortgages presents interesting challenges for the government. In bailing out Bear Stearns, the Fed ended up with a lot of mortgages that are under water and facing foreclosure actions. They are both commercial and residential, and it's a dilemma for the government.
It's one thing to look like the police in reining in "greedy" commercial lenders, but another to be the lender who is taking the home.
I wonder if this after effect was anticipated by the reserve banks. How this situation plays out will be very interesting. I think we will see much leniency with borrowers on this.
I heard that the government is providing a 3 million fund to help home owners.