Posted on 08/31/2007 5:15:44 PM PDT by Kaslin
The Economy: We're pleased to see that both the White House and Fed are willing to take action to make sure the subprime lending crisis doesn't get worse. But we're also glad they understand they can't do everything.
On Friday, with markets looking desperately for direction, Fed Chairman Ben Bernanke told a group of bankers, economists and other wonky types that the central bank "will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets."
It was Bernanke's first public comment on the subprime crisis since the Fed's Aug. 17 move to cut the discount rate — but not the much-broader fed funds rate — by a half-point to 5.75%.
President Bush then followed up by announcing a series of moves intended to help those who borrowed under subprime lending programs and are now struggling to make their mortgage payments.
(Excerpt) Read more at ibdeditorials.com ...
Pres Bush proposed the softer side, which as a lame duck was the perfect stroke.
Like it or not, piss and moan as would-be experts always do, this was a brilliant strategy. The best.
It’s compassionate conservatism at its best.
Who suffers the consequences when the Federal Reserve makes bad financial decisions, such as inverting the yield curve, or incorrectly blaming the economy for inflation?
I think it's way more than that. I tell you, there have been numerous times during the Bush administration that I have been awed by its subtle, strategic brilliance. This is shaping up to be another. Even if the market unravels as it could for a great variety of reasons, this was politically, economically and psychologically beautiful.
Especially in this second term! We’re definitely seeing a strong, vigorous presidency. No lame duck in recent memory has done this much for the country in the last two years of his last term. It’s simply outstanding.
I have been awed by its subtle, strategic brilliance.
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Could you compare and contrast this move to his MexAmeriCanada policy for me please?
Wow! I had no idea that the Def had so much power!
It must be some mysterious instrument they now have: curve inflections.
I'm sure we'd disagree, so why bother.
Isn't that special?
Wait until my Kids get the bill for the Genius of GWB!
Good for the President!
“The damage has been done.”
What damage, and who caused it? What do you propose should have been done and when?
“Wait until my Kids get the bill for the Genius of GWB!”
Yeah and the genius of that last 40 years of a spend crazy generation of politicians and citizens who voted then into office year after year.
Demand for homes was increased by flooding the market with sub-prime capital.
The increase in demand inflated prices. No surprises there, Supply and Demand - Economics 101.
Sup-prime capital has now been vaporized. No one on Wall Street will touch new sub-prime securities.
Prices remain at or near their inflated highs but, without sub-prime financing, there are relatively few buyers who can qualify to buy at these high prices.
Many existing homeowners/mortgagees (especially those who bought using sub-prime financing) are now unable to refi because:
A: Their homes are no longer appreciating and creating sufficient equity to meet tightened lender guidelines.
B: Sub-prime financing is gone.
Not being able to refi means they’ll no longer be able to rollover their credit card debt via home-equity.
The consumer spending that has been generated by home-equity will decrease.
Who caused it? Greedy people like Ambassador to the Netherlands Roland Arnall who is the owner of Ameriquest and who should be held criminally responsible.
The internet is full of allegations made by former Ameriquest employees, including former Ameriquest CEO Wayne Lee, who allege systematic criminal conduct was going on at Ameriquest - going all the way to the top, with Arnall allegedly blocking Lee's attempts to implement reforms.
At the very least, President Bush should ask Roland Arnall to resign his ambassadorship.
Why don't we see any arrests being reported? Well, for one thing, probably because Ameriquest loves to settle these little problems out of court.
But more importantly, maybe it's because Federal investigative resources have been committed to preventing terrorism since 9/11 and, if the predators in the sub-prime market didn't deliberately take advantage of the situation, the focus on preventing terrorism certainly created an environment in which they were able to operate pretty much without interference.
How do you prevent this in the future?
Well, for one thing, checks should be put in place by the SEC to ensure that, when these loans are securitized, the FICO score on the loan docs for each loan sold to Wall Street is the same as the FICO score returned for that loan by the FICO reporting agencies.
See, if the FICO scores reported to Wall Street investors are BS, then the values of the resulting mortgage backed securities, valued using those FICO scores, are BS too. That's probably not a good thing - Unless you happen be lucky enough to own derivatives that are betting on those securities going south.
Fun game these revolutionary geniuses cooked up, isn't it?
The spins offered by PR team in this thread are really hilarious.
Well, covering up for the perpetrators isn’t an acceptable answer.
Arnall should be tossed overboard ASAP. He’s a political timebomb and he’s nothing but a liability for the president.
Besides, he’s not even really a Republican. Google him.
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