Obama's 'August surprise': A 'gigantic' Main Street bailout?

"Main Street may be about to get its own gigantic bailout," says Reuters blogger James Pethokoukis, if Wall Street rumors of an Obama administration "August surprise" are true. The speculation is that Obama will order Fannie Mae and Freddie Mac to forgive a portion of millions of "underwater" home mortgages, costing the Treasury billions. (The Treasury says no such plan is in the works.) Will Obama really drop this "stunning political and economic bombshell" so close to November elections, and if he does, who will it help politically?

This bailout has been in the works for a long time: Obama's economic team has been planning such a "giveaway" for months, says Joe Weisenthal in Business Insider. Remember how Treasury gave Fannie and Freddie a "blank check" for Christmas? Clearly, the plan is to "turbocharge" the home mortgage market and "pump more money" into the flagging economy.

"This gigantic Fannie and Freddie giveaway has been In the works..."

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These rumors are ridiculous: Pethokoukis' "political blog post" is just "part of the silly season," says Bill McBride at Calculated Risk. He doesn't even bother to back up his "nonsense" except with some generic Wall Street investor notes. "Sure, some small changes could be made to Fannie and Freddie" — but a gigantic mortgage bailout? "Not. Gonna. Happen."

"Nonsense rumor on Fannie and Freddie"

There's no political upside to the plan: Fine, but "given that we're in the territory of rumors," says Chris Good in The Atlantic. Let's have some "some rumor-based speculation" about how this would play politically. My guess: Not well. You might recall that the last time Obama "lent a hand to struggling homeowners," in February 2009, he sparked the Tea Party. He's not going to risk that kind of "enormous political backlash" before November.

"How would forgiving mortgage debt affect Obama?"