I think the government should somehow guaranty subprime loans- but only the amount of interest above the initial teaser rates.

I think a lot of innocent people were enticed into these loans due to their low rates. As the rates increased, so did their payments which they could no longer afford. I do believe in personal responsibility so I think it's fair that if someone entered into a loan and are able to pay that initial rate of interest, then they continue to do so. But any amount over that, the fed picks up. If the person can't pay the loan with the low interest rate, then that says something about their personal situation and perhaps they made a bad decision and the property should be foreclosed. But since we are heading into a recession and we don't want a whole lot of these foreclosed properties on the market (not to mention the toll it takes on individuals who might potentially lose their homes) it might make sense to also offer guarantees under other circumstances. But have a cap on the payments- perhaps cap the payments to support what a typical home in that market would costs. I'd have a problem subsidizing people living in luxury homes. If they fall on hard times they should down size. Oh, and this plan would only be in effect for a year or two, just while we weather the current storm. I can hear some of the folks on here groaning about this already….