More on the Treasury Plan

James Surowiecki's "Financial Page" column in The New Yorker, available here, discusses the Treasury scheme for dealing with the current problem of defaulting subprime mortgage loans and the near future problem of further defaults as the rates for many of those loans reset to higher levels next year.  Surowiecki's take on the plan is very much like that I noted earlier in The Economist's comments on the plan.  The interesting point made by both Surowiecki and The Economist is that the plan could have been devised by the lending industry but for the costs of putting together and enforcing such a plan and the external costs that widespread financial distress might impose on the economy.  I must say that the plan to divide those whose rates are to be reset next year into three groups, only the middle of which will receive aid, raises all sorts of problems.  Inevitably, some will be inappropriately classified.
TSU