Normally, I have a lot of respect for Bloomberg.com, but their recent article on the US Government’s pledge of 7.7 trillion to ease frozen credit seems a little absurd all things considered.  Their numbers include some of the following expenses:

$3.18 trillion — Already been tapped by banks and other financial institutions

$2.4 trillion — Set aside to buy short-term notes, or commercial paper, that companies use to pay bills

$1.4 trillion — Used by the FDIC to guarantee bank to bank loans

$29 billion — To help with the Bear Stearns takeover by JP Morgan Chase and Co

Under their government conservatorship, Fannie Mae and Freddie Mac, the largest US mortgage-finance companies, will adopt new programs to reduce foreclosures and speed the process of modifying loans.  Unfortunately, their plans will only help those most likely of losing their homes, leaving the average middle-class family struggling to maintain.

The target of this program is borrowers who are at least 90 days delinquent with high loan to income ratios (or just about anyone that has purchased a home in the last five years).  Neel Kashkari, the Treasury’s interim assistant secretary, said, “with such broad adoption, this new protocol will be a standard for the industry to quickly move homeowners into long- term sustainable mortgages.”  Unfortunately, what it seems to be missing is any sort of long-term vision, because as it stands right now this program is only applicable in households that are at least three payments behind.  For everyone else… there is no hope.