Mortgage Forgiveness? Forget It

DON'T JUST STAND THERE, DO SOMETHING. That's the increasingly nervous vibe going through Washington as the economy slows and November's mid-term elections quickly approach.

There have been suggestions that the Federal Reserve step-up its efforts to jump-start the economy. St. Louis Federal Reserve President James Bullard last week proposed another round of Treasury securities purchases, or quantitative easing, dubbed QE2, on top of the previous $1.7 trillion acquisition of Treasury, agency and agency mortgage-backed securities. ("Are the Helicopters About to Take Off?, July 30, )

Then came a story in the Wall Street Journal that the Fed was mulling the reinvestment of the principal payments on its big, $1.25 trillion MBS portfolio, sort of QE Lite ("Fed Mulls Symbolic Shift", Aug. 3.). Those actions would help keep long-term interest rates low to bolster the beleaguered housing market.

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