This is the Cato Daily Podcast for Thursday, December 13th, 2007.

I'm Caleb Brown. Treasury Secretary Henry Paulson is out with a plan to rescue many mortgages that might otherwise end in foreclosure.

It's being advertised as a plan without a government bailout, but there are implications beyond

mere federal spending, including some pressure for states to get into the mortgage bailout

business.

Steve Levinsky, the Cato Institute's Director of Budget Studies, comments on the pork barrel

implications of the mortgage mess.

The plan that was announced by Treasury Secretary Henry Paulson was primarily geared to try to keep people who are going to be hit with higher

rates on their adjustable rate mortgage starting January of next year from losing their

homes. The idea was to get a lot of the mortgage

lenders, Citicore, countrywide, etc. together in one room to put together what

might be considered an industry standard for trying to keep people who are currently making payments on

their home loans, but might not be able to make those same payments next year when the

arms, when the rates on the arms are raised to keep those people in their home.

Now the question I of course I and a variety of other commentators have been asking is, is this

a sort of solution that might have occurred otherwise.

And it looks like looking at what countrywide,

for instance, has been doing since October

is that these refinancing of mortgages

has begun on a case-by-lender basis, on a lender-by-lender basis and so it seems as if the

marketplace was starting to converge on the same solution.

When you look at what Henry Paulson has done, get all the mortgage lenders around the table,

...