A rescue behind closed doors

Shortly after 7 Wednesday morning in the Oval Office, President Bush signed a bill authorizing a massive government bailout of irresponsible lenders and irresponsible borrowers. It's a wonder he didn't draw the curtains and dim the lights, too.

The occasion lacked the usual pomp and circumstance surrounding major bill signings - even the Democratic and Republican sponsors in Congress were absent - because the measure is a major embarrassment for everyone involved.

Bush, who had threatened repeatedly to veto the legislation, eventually relented rather than risk a complete collapse of the nation's biggest mortgage companies, Fannie Mae and Freddie Mac, or a more destructive wave of foreclosures against borrowers who swam into financial waters way over their heads.

The bill aims to help some 400,000 Americans hold onto their homes by enabling them to refinance their loans under more favorable terms. Lenders, in turn, would agree to take a loss on mortgages they extended during the housing market's go-go years, when it seemed as if a note from Mom was about all people needed to borrow a sum of money beyond their ability to repay.

Unfortunately, Mom's not covering the note. The Federal Housing Administration - i.e. taxpayers - will insure up to $300 billion in mortgages via the bailout legislation. The Congressional Budget Office has estimated that more than a third of the homeowners will still default.

The Treasury Department, meanwhile, receives authorization to rescue Fannie Mae and Freddie Mac if they sink. The national debt ceiling was lifted by $800 billion - it's now $10.6 trillion, if you're keeping tabs - to deal with the possibility.

"The way this is structured," David M. Walker, former U.S. comptroller general, told The New York Times, "it's only a matter of how much the taxpayers are going to lose."

There are a few praiseworthy items in the legislation, including closer oversight of the lending industry by the feds - signaling, perhaps, a blessed end to the Reagan-era obsession with deregulation.

If President Bush, the current members of Congress or any of their predecessors had peeked through the curtains before now, they could have helped avert the current crisis and avoided sticking taxpayers with the cleanup costs.