The bailout bandwagon: Ex-Clinton aide is on it

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Good morning. There is another proposal being floated for a big government rescue of the mortgage market. This one comes from former Federal Reserve Vice Chairman Alan Blinder, who was also an economic adviser to President Clinton, and was floated in The New York Times:

‘During the Depression, President Franklin D. Roosevelt and Congress dealt with huge impending foreclosures by creating the Home Owners’ Loan Corporation. Now, a small but growing group of academics and public figures, including Senator Christopher J. Dodd, Democrat of Connecticut, is calling for the federal government to bring back something like the HOLC. Count me in.’

The idea is that Son of HOLC would purchase troubled mortages and refinance them at terms more favorable to borrowers, to the tune of $200 billion to $400 billion. Blinder proposes that speculators and those who lied on loan applications would be ineligible, and some troubled homeowners wouldn’t make the cut: ‘... not all bad mortgages can be turned into good ones. Where families simply can’t afford to be owners, the new HOLC should not be asked to perform mortgage alchemy.’

A couple of quick thoughts: The owners of the mortgages -- if you can find them -- have no idea which mortgages belong to speculators who lied on loan applications, and which belong to those who lied about their income.

Your thoughts? Comments? Insights? E-mail story tips to peter.viles@latimes.com.