Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.
With his stunning decision last week to let a federal housing agency guarantee mortgages of distressed homeowners, President Bush appears to have launched a "surge" in the financial markets to match the Pentagon's efforts in Iraq.
His plan seems straightforward: First, use winks and nods to convince his top Federal Reserve appointee, Ben Bernanke, that it would be in the best interest of both men to slash interest rate targets by as much as a percentage point -- and to do it quickly so the move has time to work its magic before the next election.Second, use every lever available in the executive branch to provide a direct, emphatic bailout to overstretched mortgage holders at risk of foreclosure. And third, dump as much as possible of the financial burden for paying for the rescue of voters, aka homeowners, on the nation's banks, rather than on taxpayers. If the market comes to believe his plan will succeed -- and the plan just might -- you can expect a rally in the shares of financial-services providers and homebuilders that will stun even the bulls, with big-cap banks such as Wells Fargo (WFC - Get Report) and SunTrust Banks (STI - Get Report) rising as much as 25% over the next 12 months and some beaten-down homebuilders doubling in value.