FED Considering Expansion into Principle Reduction on Existing Home Mortgages

Now this is the FED we know and have come to love.  Captain Ben Bernank and crew are out to save the world beyond their monetary policy mandate.  Before we go writing down principal balances, please give me a few weeks notice so I can go out and purchase my 5 mill dream home.
From Reuters.
On Friday, the influential head of the New York Fed, William Dudley, broached the taboo subject of principal write-downs for distressed buyers. It was this very issue, and the accompanying sense OF outrage among some Americans at the prospect of helping homebuyers who they saw as irresponsible borrowers, that spawned the Tea Party.
Dudley framed principal reductions in moral as well as economic terms, saying many borrowers simply had the bad luck to buy just before the bubble burst.
He said the New York Fed believes the waves of foreclosure will continue as more and more Americans give up on their mortgages, a move which would threatening the momentum that appears to have begun to build in the U.S. economy.
"We have to recognize that there is more to economic policy than just monetary policy," Dudley said. "There are workable solutions to our housing problems at costs that I deem very reasonable relative to the economically inefficient path we are on."

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