Finally Getting a Grip on the Sub-prime Loan Mess
Give credit where it is due. The Feds seem to have jawboned some major players into a broad response to the problems generated by the sub-prime mortgage bubble. Originally, Paulson at the Treasury was willing to let the markets work things out, but he eventually saw that this was impractical based on the volume of loans involved.
The big hurddle appears to have been the holders of the securitized mortgages. They wanted all the interest they signed for. However, they seem to be coming to the realization that there is now substantial risk of getting no interest at all. On top of that, the foreclosure process cuts into the principal of the loan.
I like the timing on this move, also. Most of the flippers and speculators have been wrung from the market. I like the terms of the proposal. It appears as if only mortgages for owner occupied dwellings come under the new approach.
The really good news is that it will allow the financial markets to put parameters abound the financial impact on financial institutions and the securities market. They will be able to define the risk associated with the sub-prime situation and spread the pain out over time. Though I’m not a guy who invests by calling the bottom in a market, this will have a very positive impact on the stock market.
From a small business perspective you will find financing more available. It might be a bit more expensive, but not as expensive as it could have been. Everyone will be breathing easier because they will be back to a business environment that they understand.
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BRAVOFI.ORG » Blog Archive » Sub-prime Drama In Plain English by Drinks Blog
Dec 20, 2007 at 6:04 am
[…] Finally Getting a Grip on the Sub-prime Loan Mess. by jim on November 30th, 2007. Give credit where it is due. The Feds seem to have jawboned some major … Loan Info […]
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