“Treasury Secretary Henry Paulson indicated the Bush administration is willing to consider congressional plans to stem foreclosures by expanding government guarantees for mortgages.”
When the price tag for the Collateralized Debt Obligations (CDOs) becomes clearer, there will be litigation. The plaintiffs will argue that they are victims of fraud and that the CDO originators should be forced to buy back the CDOs at face value, as is a normal part of these transactions.
One of the biggest CDO originators is Goldman Sachs who, notably, was not holding them when they crashed. Leading one to strongly suspect that there were misrepresentations made and Goldman Sachs knew it. Henry Paulson was heading Goldman Sachs during the time when the majority of the bad CDOs were originated.
It is possible that those found guilty would be personably liable for damages and Paulson would be front and center in the discovery process. Therefore the Treasury Department spending your money in an attempt to keep people from walking away from upside down houses.
I predict that they will fail and that Paulson will be deposed for his work at Goldman Sachs.