Subprime Meltdown Kick Starts Sausage Making

I have noted that the subprime mortgage 'crisis', if it is that, is a tale of greed and stupidity, mostly on the part of people who knowingly borrow more than they can afford to pay back to lenders. That doesn't mean we won't get dumb laws passed in the wake of this 'crisis'. The laws will come in two varieties. The well-meaning laws that aim to protect people from themselves but that have malign unintended consequences and the outright punitive laws against easy targets that aim to display politicians' populist bona fides. Here is a rundown of the sausage making, er, legislative landscape.

Here's my favorite: "Some states would establish foreclosure-prevention plans, including a Massachusetts bill that establishes a fund to lend up to $25,000 to homeowners facing foreclosure." People facing foreclosure simply can't pay. If they can't pay the bank, they can't pay the government either, so what makes anyone think that these "loans" won't simply be handouts that create incredibly bad incentives for people to stretch themselves when buying a home and taking out a mortgage. Also, where would those government "loan" proceeds go? To the banks most likely to get the foreclosure process stopped, which seems to me to be just another elaborate corporate welfare transfer payment, a subsidy of sorts to banks for not being nasty to people by seizing collateral.