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Mortgage Plan Brings Rally For Homebuilders

Well. We haven't seen this kind of ideological food fight in a long time. The battle among traders about whether President Bush's plan is a rational response to the crisis or an unconscionable bailout is really beside the point. The central problem is that freezing adjustable mortgage rates is not a long-term solution to even the ARM problem.

Ideology aside, what we really need, of course, is some way to get those homeowners into a fixed rate, long term mortgage. Punting the ultimate solution off for a few years will take a few loans off the table, but it now becomes the next President's problem.

Regardless, homebuilders are staging their biggest one-day rally in months; Residential Housing Index up nearly 7 percent. What does this plan do to decrease the inventory of unsold homes? To the extent that it may result in fewer foreclosures, it will help.

By the way: the President gave out the wrong number to call for help. He gave out 800-995-HOPE, the correct number is 888-995-HOPE. That 800 number? Is the Freedom Christian Academy & Ministries, a Christian home-schooling organization. The White House later issued a correction.

Questions? Comments? tradertalk@cnbc.com

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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