Big things are happening!

Here is your late Thursday (hey, it's August) news dump from the Obama administration -- pretty juicy stuff.

Thing 1:

Christina Romer, chairwoman of Pres. Obama's Council of Economic Advisers, has decided to resign, according to a source familiar with her plans.

Romer, an economics professor at the University of California (Berkeley) before taking the key admin post, did not respond to repeated calls to her office.

"She has been frustrated," a source with insight into the WH economics team said. "She doesn't feel that she has a direct line to the president. She would be giving different advice than Larry Summers [director of the National Economic Council], who does have a direct line to the president."

Thing 2:

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie.

As for Thing 1...not good. If Romer was trying to give Obama the opposite advice of what he was getting from Summers, then Romer should have stayed and Summers should have left. On the other hand, this news of a Main Street bailout seems at odds with Thing 1 (maybe it's not happening, and that's why Romer left?) The right-wing reaction will be priceless if it does go off.

At the end of the day, something must be done -- I (and much more importantly most economists) would have preferred Stimulus 2, but the Gang of 41 won't let that happen, so Obama is faced with doing nothing -- which is not a very good plan as unemployment creeps back toward 10 percent -- or doing something that will inflame the Rick Santellis of the world more than they've ever been inflamed before, but will bring some relief to everyday Americans.

I hope he brings it on.