Congress finally passed the housing bill and the President signed it, but champagne corks have not been popping. The president dropped his threat to veto the bill, presumably when his Treasury Secretary explained that, without the Fannie and Freddie bailout that it now encompasses, there would be a financial meltdown. The general view is that the bill is better than nothing and better late than never.
But it is not going to avert a whole lot more pain in housing, the credit markets and the economy.
While the mortgage refinancing piece of the bill is usually cited as designed to head off 400,000 foreclosures, it turns out that it's really more like 240,000.
The other 140,000 borrowers who use the provisions to re-negotiate their loans are expected to default on their new mortgages, too. That double default prospect is a depressing thought for taxpayers who will pick up the tab, and for anyone expecting much relief for the housing market. Worse still, whether the measure just passed averts 400,000 or 260,000 extra homes being put on the market, it seems likely to be a drop in the bucket. Dean Baker at American Prospect expects five to six million foreclosures this year and next.