Chairman Bernanke and other politicians have repeatedly suggested that the mortgage lenders should “forgive” a portion of troubled home loans.  I struggle with the term “forgive.”  In my world, you “forgive” people that are guilty of something.  Yet over and over, I hear the politicians suggesting that the homeborrowers were just innocent bystanders taken advantage of by predatory lenders.  So “forgive” me for being guilty of not being very forgiving.

More importantly, I cannot help but wonder where the urge to “forgive” ends when it comes to the Fed.  If it is such a good idea for the Fed to recommend that banks take a haircut on loans made at ridiculously low levels at questionable valuations with shaky collateral, then I have to ask….is that going to apply to the loans the Federal Reserve has made.  Would the Fed be willing to take its own advice?