Why, exactly, does this guy still have a job? The Housing Crisis continues to drag down the economy like a sack of wet cement and this guy wants to block the best chance for ameliorating it? Obama needs to fire his ass. Today. Let’s keep in mind, by the way, that what he’s objecting to (a “cram down” of principal on upside down home mortgages) is already available to corporations in bankruptcy. This is how big corporations in “re-organization” can stick it to their union employees and pensioners. Why shouldn’t such power be available to consumers and families, either through this program or through bankruptcy?
FULL DISCLOSURE: There’s at least one person in my family whom I suspect would benefit by this program if implemented.
The Local Crank
The Local Crank 
Because these are taxpayer funds that are propping up Fannie and Freddie, and if the mortgage principal were forgiven or reduced on the scale proposed, this would result in huge losses to the taxpayers that would not be recoverable. Secondly, there is simple fairness. Your neighbour who has the same house as you, with the same depressed value, and the same mortgage payment to make but sweats each month to make the payment on time to keep his home. At the end of the day, you get a reward for falling behind in your payments, by getting a better mortgage rate with a lower monthly payment for the same house as your neighbour. What does he get? He gets to continue to pay the higher price to keep his home and meet his commitment, or he could get the idea, that if he too stopped paying, he too could get his payment reduced. That is bad policy on so many levels. And would be catastrophic to the housing market and further exacerbate the problem and leave the taxpayer with significant new realised losses.
You make good points, but what’s the alternative? We have entire subdivisions of underwater houses. They are never going to sell and never going to be paid off. More and more are simply abandoned, which causes property values to tank farther.