The Washington Post has a story this morning about a new Bush administration plan to help homeowners who are "underwater," that is, whose home is worth less than their mortgage and can't sell or refinance it because they don't have the cash they would need at closing.  Contrary to the president's often-repeated assertions that he wouldn't do it, the plan apparently will require taxpayer dollars.

Anyone who has watched the mortgage situation deteriorate over the the past year could see this coming.  The early "over my dead body" statements by the administration were slowly, incrementally, and sometimes imperceptively replaced with positions that tilted increasingly toward "not yet."  In other words, it was only a matter of time.

Steve Forbes' Monday (3/17/08) morning interview on CNBC deserves comment because he recommended ignoring market valuations and urged federal intervention in currency markets that would cost U.S. taxpayers a lot of money.

Forbes recommended suspending the SEC's "mark to market" valuation rules for U.S. financial firms because many products, mortgage-backed securities in particular, are not trading now, or are trading a unusually low valuations. The rules allow the use of computer model valuations when there are no market prices, which Forbes also dismissed. This is unusual behavior for a staunch adherent of the "free market."

The irony is unmistakable and almost unbelievable.

As you watch and read the reports about what Wall Street people are saying the federal government should do to make the current economic situation better and avoid an even worse problem, you can't help but wonder what happened to their capitalist and free market credentials.  The same people who, when times are good, not-so-politely insist the government must have as small a role as possible in the economy and criticize those who dare suggest that legislation and regulation are necessary, are now demanding that Washington get heavily involved because things aren't going so well.

Steve Forbes, who usually routinely rails against Washington involvement in the economy, yesterday became the poster child for this view when, during an interview on CNBC, provided a laundry list of things the government needed to do immediately.