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A Looney Housing Rescue Bill

If I've read the articles right, the $29 billion housing rescue deal agreed to by the leaders of the Senate is a waste of taxpayer dollars.

It looks like the Senate has decided the way to attack the housing problem is to reward some reliable campaign contributors--i.e. homebuilders. How else to explain that the bulk of the legislative package goes toward a new tax break for home builders. It allows homebuilders to claim current losses against taxes paid in prior (and more profitable) years. In essnce, they're getting a hefty tax rebate.

Go figure.

Worse yet, the Senate dropped the one proposal that could have made a difference: Allowing bankruptcy judges to modify the terms of residential mortgages in personal bankrupty.Bankruptcy is a well-established safety net. It has many experienced judges and trustees. The move would go a logn way toward solving the housing foreclosure crisis. But the financial services industry opposed it--and the Senate listened. Question is, how does the financial services industry manage to wield political power after all the damage they've done to the economy and households?

About the author

Chris Farrell is the economics editor of Marketplace Money.

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