U.S. Senator Jeff Merkley (D-Ore.) is getting some buzz for a plan he announced yesterday intended to help homeowners refinance their "underwater" mortgages—that is, situations where the homeowner owes more to the bank than the resale value of their property. 

Merkley's plan would create an agency called the Rebuilding American Homeownership Trust, which will buy up those mortgages with money backed by bonds sold to investors, and offer new terms to the borrowers.

"Over the last four years, America has been very aggressive in helping out the large financial institutions on Wall Street," said Merkley, in a YouTube video explaining his proposal. "But we haven't been bold in assisting American families, and we have a lot to gain in doing so."

In a Senate Banking Committee hearing, Secretary of the Treasury Timothy Geithner praised Merkley's proposal.

"We like the way you designed it and we think it would be good economic policy and good for the country," Geithner said. "It would help reduce the remaining pressures [underwater mortgages have] put on the economy as a whole."

Slate's Matt Yglesias calls Merkley's proposal "ambitious" and compares it favorably to a program from the New Deal era.

Yglesias concludes:

The chances of Congress actually doing this are slim to none, but folks at the Fed, at the Treasury, and at the Federal Housing Finance Authority ought to take note and do what they can to approximate the impact of this plan.