We’ve finally gotten around to reading the words that the Bearded One spoke at Columbia Business School on Monday night. Stitching together his various proposals, it’s clear that Ben Bernanke has become a partisan of big government. The way we read it, he pretty much calls for the federal government to bailout lenders who have provided mortgages for homes that have suffered major declines in value.
At one point in the speech, Bernanke called on Congress to expand the Federal Housing Administration, both in terms of its role in issuing mortgages and determining underwriting strategies in order to help “troubled borrowers.” How does he expect the expanded FHA to help? By bailing out lenders with mortgages where the principal is now worth more than the value of the home.
“In some cases, when the source of the problem is a decline of the value of the home well below the mortgage's principal balance, the best solution may be a write-down of principal or other permanent modification of the loan by the servicer, perhaps combined with a refinancing by the Federal Housing Administration or another lender,” Bernanke said.
In other words, the Federal government should step in to refinance loans in danger of defaulting due to the decline in housing prices.
Posted by guest , May 07, 2008 10:59AM
Look...I've been driving for Walmart for 15 years and my wife Sharon is a nurse. We bout a $950,000 home (our American dream) and qualified for a $2,000/mo payment. We moved in and then the payments went to $10,000 per month. DeWayne, my neighbor, works at the autoparts house and he did the same thing. His payments jumped and he can't make those like we can't. Now we're all trying to sell our houses but their value has dropped to $650,000. My real estate agent won't call me back for some reason.
Posted by guest , May 07, 2008 11:05AM
..maybe give up working at wal-mart and move to NYC to work at a major investment bank...
Posted by diablo , May 07, 2008 11:08AM
товарищ Bernanke held out hope that the housing crisis was all contained not so long ago. I guess he was looking at the wrong charts then. Naughty, naughty!
Posted by guest , May 07, 2008 11:08AM
Start a food bank and support RCII's anti-payday loan cap efforts.
Posted by guest , May 07, 2008 11:54AM
@diablo:
я с вами, братом
Posted by guest , May 07, 2008 12:09PM
@11.54-- the clerom response is more "zemlak", more than 'bro'!
Posted by guest , May 07, 2008 1:07PM
are their a bunch of cyrillic characters on my screen or am I going John Nash??
Posted by guest , May 07, 2008 1:11PM
yeah, couple of commie douches trying to show they know how to type and keep secrets. I hope NSA is on their asses like Hillary on a dildo.
Posted by guest , May 07, 2008 1:51PM
@1:11
toute votre base sont appartiennent à nous
Posted by guest , May 07, 2008 2:18PM
look Froggie, your new Prez is gonna be an American lapdog shortly, so dont go acting all special. (And I hope you mean 'bases', not 'basis'.)
You're another idiot wanna-be like the russkies.
Posted by guest , May 07, 2008 10:21PM
I will enthusiastically support this so long as a plan to write a check to everyone who is *not* upside down in their houses for the average percentage of equity that the inverted crowd is being gifted is also implemented. That way *their* manna from heaven doesn't double-sock *me* (my tax money bailing them out, *and* my purchasing power diminished by all the money the government would print to make it happen.)
I've lived in this shack since long before the bubble... even at today's prices a bribe like that would do a great deal to salve my outraged free-market sensibilities.
Posted by guest , May 07, 2008 11:23PM
Ben's evil plan has so far worked...
By cutting rates down to 2 percent, all those ARMS will reset to more or less what people are paying now.
People who can afford their current sitch will thus have time to get fixed rate loans at their leisure, while those can't anyway will be dumped out of their McMansionettes forthwith.
Home price drops will hit the brakes at 20 percent downside after their 100 percent rise, real estate will rebound in late 2008 (or at least flatten out with most homeowners sitting on good equity).
The new president will come in to a near-recession but not a disaster, and then Ben will begin a rate raising round to battle back inflation, but it won't be a Volcker-style flame-throwing situation, since the impending China slow-up and slower U.S. growth will make crisis management less necessary.
Incoming POTUS will realize what a mess he/she has avoided, say nothing untoward about the current Fed, and we'll all be back to 3.x percent U.S. growth and Dow 15K rising by March/April 2009.
Mark my freakin' words.
Posted by guest , May 08, 2008 1:21AM
@10:21pm. What's with the asterisk use instead of quotation marks? Plus nothing you marked needed to be in quotes in the first place.
Posted by guest , May 08, 2008 9:41AM
@1:21AM. I'm too lazy to figure out how to use tags on here, if you even can. The asterisks are for *emphasis.*
Emphasizing random words is a bad habit I got into after listening to too many speeches by *our President.* I think I *may* need *therapy.*
:)