“The problem was that these purchases occurred near the peak in the market”

No, the problem was that a housing bubble existed, and it was fueled by YOUR agency.

How could this guy recommend policies which will rob taxpayers by hundreds of billions of $$$, thereby encouraging MORE people engage in reckless financial behavior?

The FRB helped to create bubble, yet continually denied its existence. Any honest or intellectual individual could see that it was a bubble. I saw it, most economists saw it, and my barber saw it.

Then there is the insistence that mortgage debt is a problem, and ought reduced (on the backs of taxpaying non-debters) while continuing their contradictory policy of artificially-low target rates… low to ENCOURAGE higher leverage, higher loan amounts, and higher private debts.

“and now many of the buyers have suffered and adverse life shock such as unemployment or illness”

Many people have suffered those things, and there are safety nets them. A near-trillion-dollar bailout for the predominantly-wealthier class who participated (and perpetuated) this bubble is the MOST immoral and LEAST economically-defensive policy which could even be considered. Those “adverse” events such as illnesses have NOTHING to do with whether they are home-debtors or not. This b.s. is insulting.

“This isn’t a moral hazard issue, this is just the bad luck associated with the timing of the purchase and an exceptionally weak jobs market”

No, timing is irrelevant, it is 100% a moral(and moral-hazard)issue, and “bad luck” is a euphemism describing reckless speculative gambling.

Was losing money in the tech bubble bad timing? Were investors “suffering” or in need of a bailout?

People had a choice – proven by the one-third of the country who were renting when ANYONE could buy ANY house. To make that leap was 100% your fault (the FRB and your lender are at fault for your ability to do this), and taxpayers have already subsidized enough of this stupidity.

“Punishing such misfortune accomplishes little”

Punishment? How stupid does this jerk think people are? There is NO punishment. I would take a 300-point his on my credit score to eliminate a half million in debts ANY day of the week. Fact is, the lack of punishment is why a third of foreclosures are strategic default. People who gambled and drove up the prices of RE and can still pay are choosing not to.

The bubble was perpetuated by a sub-populace of willing participants. They either did not research the most expensive purchase in their life, or were gambling with others’ money due to pure greed. Either way, their ability to walk away and not pay back the money creates a huge moral hazard. Sweetening the deal with de-facto six-figure reward money is disgusting.

If there were ever a reason to outright oppose the existence of the FRB, it is this soulless, gutless, policy wonk Mr. Dudley. When can we stop this revolving door from Goldman Sachs into our govt? Every action they take is another blood letting on the American people and our economy.

The #1 key element of the plan, the “silver bullet”, is an ingenious “One – Year Mortgage Holiday” for every home owner & business in America, so that for 12 months, you do not have to make a monthly mortgage payment. All Renters of apartments, retail & office space will also get a 38% rebate on their rent. Consequently Main Street, that has already spent & wasted Trillions bailing out Wall Street and received nothing in return, since credit markets are still frozen, foreclosures, unemployment and bankruptcies are still rising, would then be able to have a well deserved one year “Time Out”, from having to make a mortgage payment. So a 25 year mortgage simply becomes a 26 year mortgage. All mortgage bank lenders, would still be paid a monthly average interest rate of 6% on all mortgage debt in the country. This would allow consumers, all home owners, renters and businesses to decide for themselves how best to spend, save & invest their own money each month, that would inject approximately $80 billion monthly back into the economy.