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Mortgage giants Fannie Mae and Freddie Mac, which were bailed out by the US Treasury have announced that they will halt all foreclosure and eviction proceedings during the holiday season. The pause is not simply a seasonal present from the two corporations – it is meant to allow time for the Bush administration’s mortgage rescue plan to work. That plan, called the Streamlined Modification Program, would help modify a narrow set of troubled mortgages starting December 15th, but stops short of direct financial government assistance. Meanwhile, the $700 billion Wall Street bailout approved by lawmakers is still apparently not going to be used to aid homeowners at risk of losing their homes. Treasury Secretary Henry Paulson has continued to defend his position on the issue against a growing chorus of elected and other officials, including Sheila Bair, chair of the FDIC, Speaker of the House Nancy Pelosi, and my guest this morning, California Congresswoman Maxine Waters. When Secretary Paulson pleaded to Congress for the bailout package earlier in the year, his stressed that the main goal was to purchase defaulted mortgage-related debt and securities from banks and financial institutions. That goal has now been abandoned as Paulson gets ready to return to the industry upon the end of the Bush tenure.

GUEST: Dean Baker, Co-Director of the Center for Economic and Policy Research

For more information, visit www.cepr.net.