A senior Treasury official told HuffPost on Monday that the department was heading towards more writing down of principal as part of its mortgage modification efforts, and that an announcement was to be expected in the next few weeks. But a Treasury spokesman e-mailed to say that Treasury was "NOT poised to roll out a major principal write-down program."
Anyone want to bet against Fannie/Freddie rolling out a principal reduction program and the Treasury backing them in the next few months? The above quote makes complete sense when taken in that context. That way the Treasury doesn't get blamed for supporting "moral hazard" but is still putting the taxpayer on the hook for bailing out homeowners. Treasury can say that Fannie/Freddie made the decision and Treasury merely is doing everything it can to keep Fannie/Freddie afloat to keep mortgage funding going.