February 21, 2009

But BofA's huge effort to keep consumers in their homes does not necessarily offer safeguards against redefault One admittedly unconventional way to understand the Obama Administration's latest economic rescue attempt is as a potential victory for the beleaguered banking industry.Sure, the plan the President announced on Feb. 18 aims to help 4 million families stay in their homes, offering others the chance to refinance mortgages at lower interest rates.

But in another sense, the $75 billion proposal constitutes an incremental win for lenders and loan servicers that have been engaged in a two-year game of chicken with Washington.Since late 2006, when the subprime debacle began to come into focus, many housing-finance veterans have known that the mortgage industry would eventually have to take a big hit for marketing so many loans to so many borrowers who weren't likely to pay them back.