The Feds are touting a temporary freeze on teaser rate loans which are scheduled to reset soon. Full Story. However, the proposed plan excludes those home loans that piggy-backed a second to cover the missing down payment.

Also excluded are the no-doc loans where evidence of income was not required. Excluding these two categories will leave much of the sub-prime loans in jeopardy.

The home loan industry will agree, in principle, to go along with whatever plan is put forth. But in reality, few re-sets will occur.

What’s really needed is strong federal regulation of the financial sector beginning with credit cards and extending to home mortgages.

Past history including the Savings and Loan industry melt down and now the sub-prime problem demonstrates that without federal oversight, Wall Street will do what ever it takes to make a fast buck.

Many consumers who already have lost their home to foreclosure are dismayed at the government action now to freeze mortgage rates to avoid massive defaults on home loans. One man interviewed in a Reuter’s story put it this way, “They’re trying to keep the you-know-what from hitting the fan until after the election,” he said. “The rhetoric is ‘We’ve got to help homeowners,’ but the reality is it’s designed to help the fat cats, Wall Street. It’s bailing out the lenders.” Full Story.

Of course, the man is right. This is not about helping the little guy, it’s about protecting those who have already made a fortune on an ill conceived mortgage shell game. The culprits hope to avoid scrutiny from State Attorney Generals looking for potential fraudulent activity.