The dilution of the United States dollar to enable a de facto debt default has begun. The only way this will be feasible is if several of the other major currencies are inflated in sympathy with the dollar.
The dollar 'rally' and coordinated pressure on the metals and oil today that was ignored by the bond market makes a little more sense now with regard to timing.
Vote out all Republicans and the Democratic leadership this fall.
U.S. Lawmakers Reach Deal on Fannie, Freddie Bill
By Brian Faler
July 22 Bloomberg -- U.S. lawmakers reached agreement on a rescue plan for Fannie Mae and Freddie Mac that the House may vote on tomorrow, Representative Barney Frank said.
Under a modified version of proposals made by the Bush administration, the Treasury Department would gain authority to inject capital into the two largest U.S. mortgage finance companies, through loans and equity investments.
The agreement is the clearest indication yet that Congress will approve a backstop for the beleaguered companies, which Treasury Secretary Henry Paulson said today is essential for safeguarding U.S. financial market stability. Lawmakers added the provisions to legislation that would create a stronger regulator for Fannie Mae and Freddie Mac and expand federal efforts to stem mortgage foreclosures. 
``The package we have got is fully acceptable'' to the Treasury and Senate lawmakers, Frank, a Massachusetts Democrat who chairs the House Financial Services Committee, told reporters in Washington today. ``Nobody is for everything that's in it or got everything in it he wanted, but we negotiated a lot.''
Treasury spokeswoman Brookly McLaughlin said in an e-mailed response to a question that the department is reviewing the language of the bill, which is 694 pages.
Crossing White House
Frank said lawmakers, defying a White House veto threat, decided to keep provisions for $3.9 billion to help local communities buy up foreclosed properties. The Bush administration opposed the idea because it said it would aid lenders who now owned the vacated properties, not struggling homeowners.
``It's clear that the Democrats chose to play politics with the legislation,'' White House spokesman Tony Fratto said in an e-mail, without mentioning any veto plans. He echoed McLaughlin that officials are reviewing the bill.
The Treasury would be barred from providing aid that would cause a breach in the federal debt ceiling under the agreement, a constraint aimed at limiting any taxpayer losses. The debt limit would be raised to $10.6 trillion from the current $9.815 trillion.
The plan would give Paulson power to restrict the companies' dividend payments and require regulatory approval of the salaries of top executives. (But we're not nationalizing them right? - Jesse)
Higher Cap
The legislation would also raise the limit on the size of the mortgages the companies may purchase. The new cap would be $625,000, or the median home price plus 15 percent, whichever is lower, Frank said.
Frank's counterpart in the Senate issued a statement indicating he backs the bill now progressing in the House.
``We have been engaged in extensive and largely fruitful discussions with our counterparts in the House'' and with Bush administration officials, Democratic Senator Christopher Dodd said in a joint statement with Republican Senator Richard Shelby distributed by e-mail. ``We remain optimistic about the prospects for this legislation.''
Dodd, of Connecticut, chairs the Senate Banking Committee and Shelby, of Alabama, is the panel's top Republican. (Dodd is the Senator who took the inexpensive mortgage from Countrywide - Jesse)
Paulson, who proposed a rescue program on July 13, reiterated today the plan is aimed at restoring investor confidence in the two companies.
Slide in Stocks
Fannie Mae has dropped about 45 percent in the past month, and Freddie Mac has tumbled about 60 percent, on concern the companies have insufficient capital to cover writedowns and losses amid the mortgage-market collapse.
Lawmakers wrapped the plan into a housing bill that would create a program aimed to help an estimated 400,000 Americans with subprime home loans refinance into 30-year, fixed-rate mortgages backed by the government.
The legislation includes tax breaks to help prop up the housing industry, including what would be the equivalent of an interest-free loan worth as much as $7,500 for first-time homebuyers.
The bill also would allow taxpayers who don't itemize their tax returns to temporarily claim a property-tax deduction, said Representative Richard Neal, a Democrat from Massachusetts and member of the Ways and Means Committee. States could offer an additional $11 billion of mortgage-revenue bonds to refinance subprime loans.
Final Approval
The Senate may vote on the legislation as early as July 24, said Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada. The bill would then go to President George W. Bush for final approval.
A Congressional Budget Office estimate released today put the cost of Paulson's plan at $25 billion, a figure below the total that some lawmakers had expressed concern about. (LOL, like the early estimates on the Iraq war. 25 billion. Is that why they lifted the debt limit by about 800 billion? And that's for openers. - Jesse)
``It's pretty good news -- a lot of people thought it would be much higher,'' Shelby said earlier today. (ROFLMAO - Don't worry it will be - Jesse)
Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac own or guarantee about half of the $12 trillion in outstanding home loans.
The companies, which buy mortgages from banks, face mounting losses stemming from the collapse of the subprime home loan market.
Lawmakers rejected a proposal to bar Fannie Mae and Freddie Mac from paying dividends while they are tapping the expanded line of credit with Treasury, Frank said. They decided instead to give Paulson the power to restrict such payments or to take preferred stock in the companies, he said.
``It's not a mandate,'' Frank said. ``He's got to have some flexibility.'' (And a wide stance - Jesse)
Paulson wanted Congress to grant the Treasury temporary authority to buy stock in the companies and offer an unlimited federal credit line.
