How to make the EESA bill more helpful to Main Street: On CNBC, Rahm Emanuel pointed out

that the most populist element of the EESA bill also is an element of financial genius. Obama insisted on a foreclosure prevention provision to keep homeowners from being put out on the street.

But this provision also could help taxpayers, especially if Treasury prioritized "bad paper" CDOs for purchase by zipcode delinquency rates of the mortgages inside them. As owner of large numbers of "CDOs" each made up of pieces of hundreds of individual mortgages, Treasury could increase their value by working out realistic payment terms with homeowners rather than putting them in the street. More money would come to taxpayers from higher monthly mortgage payments and from higher home values as fewer concentrations of foreclosures depress local real estate markets.

In its current form, the bill does not say much about this aspect of the plan. But the section covering foreclosure prevention could be rewritten to drive the choice of "bad paper" to buy.

What's your opinion? How could EESA be made more helpful to ordinary working people?

From http://www.nytimes.com/2008/09/23/opinion/23kashyap.htm... :

"The $700 Billion Question By ANIL K KASHYAP and JEREMY C. STEIN September 23, 2008 Op-Ed Contributor

"Beyond just buying and holding, a second job for the agency might be to restructure the mortgages it acquires. For example, it could reduce required interest payments so that fewer homeowners default on their loans. Done well, this could avoid costly foreclosures, thereby benefiting homeowners while also raising the value of the securities that the government has bought. This sort of restructuring has been difficult until now, because individual mortgages have been sliced and diced, and the pieces widely scattered. However, if the new agency winds up owning a majority of all problem mortgages, reconfiguring them so that interest payments are lower may become practical."

BTW, the authors of this op-ed are the brains behind the fundamental "insurance" idea McCain, Ryan (R, WI), and the House Republicans insisted upon. (see their very technical paper at http://www.kc.frb.org/publicat/sympos/2008/KashyapRajan... ). But of course insurance must be bought in good times, not while you're on your way to the operating room.

See also http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7244767 . Iposted this there but then decided to also make it its own thread.

I think we have to change how we define any plan if we're going to get support?

For an informative topic.