Geanakoplos/Koniak: Mortgage Justice Is Blind [OPINION] ·
Yale economist John Geanakoplos and lawyer Susan Koniak suggest that if the U.S. wants to avoid a tsunami of home foreclosures, then Congress must transfer the rights to restructure mortgages from security holders back to community-based, government-appointed trustees. (NYT)
October 30, 2008
Mortgage Crisis
Europe Moves To Regulate Rating Agencies ·
European officials are drafting a plan that would require rating agencies to publicize working methods and compensation. The measure would effectively end self-regulation for the agencies, whose ratings many believe underestimated the risk of subprime credit products. (NYT)
Treasury, FDIC Discuss $600B Anti-Foreclosure Plan ·
The U.S. Treasury and Federal Deposit Insurance Corporation are reportedly planning a new $600 billion federal program to guarantee mortgages and help prevent home foreclosures. The program could potentially guarantee up to 3 million at-risk mortgages. (Reuters)
Fannie, Freddie Takeover Hasn’t Paid Off [ANALYSIS] ·
Analysts argue that the U.S. government's takeover of mortgage finance giants Fannie Mae and Freddie Mac has proved ineffective, failing to lower mortgage rates and stem the flight of foreign central banks from agency debt and mortgage bonds. (Washington Post)
We Can Keep People in Their Homes [OPINION] ·
Andrew Caplin, Thomas Cooley, Noel Cunningham and Mitchell Engler argue for an alternative allocation of the U.S. Treasury's $700 billion bailout funding: structure shared appreciation mortgages, or SAMs, to write down portions of mortgage debt on the condition U.S. homeowners share future appreciation gains with the U.S. taxpayer. (WSJ)
Glaeser: There Will Be Blood [OPINION] ·
Harvard economist Edward Glaeser argues that while private actors overwhelmingly contributed to the financial crisis, some government interventions such as home mortgage interest deduction helped to make the crisis worse. Going forward, he cautions against putting the entire financial system in a regulatory straightjacket. (Economix)
McCain Calls For Bailout Of U.S. Homeowners ·
Republican running mates John McCain and Sarah Palin said Tuesday in their first live interview that the U.S. government's top priority in the financial crisis should be to buy bad mortgages from troubled homeowners as it did via the 1930's Home Owners' Loan Corporation. (CNBC Video)
U.S. Home Sales Unexpectedly Jump 5.5% ·
The National Association of Realtors reported Friday sales of existing homes rose 5.5% in September, the biggest increase since July 2003, spurred by a rise in foreclosure and other "distress sales" in regions hard-hit by the housing downturn. (Reuters)
Treasury To Buy Stakes In 22 Regional Banks ·
The U.S. Treasury will reportedly unveil plans Friday to inject billions of dollars in equity into 22 U.S. regional banks, including Capital One and PNC Financial. Meanwhile, financial firms indicate the Treasury's original plan to buy toxic assets from troubled banks has stalled. (Washington Post)
Home Sales May Have Bottomed [OPINION] ·
Economist Rebecca Wilder argues that with Fannie Mae and Freddie Mac now explicitly backed by the U.S. government, there is no reason for the housing market not to “stabilize.” (News N Economics)
FDIC’s Bair Suggests Guarantees for Loans ·
Federal Deposit Insurance Corp. Chairman Sheila Bair told the Senate Banking Committee Thursday that the government should provide loan guarantees and other financial incentives for banks that are willing to restructure troubled loans into more-affordable mortgages. (WSJ)
Foreclosure Filings Rise 71% In Third-Quarter ·
RealtyTrac reported Thursday that foreclosure filings in the third quarter rose 71% from a year earlier, but that recent measures taken by state lawmakers temporarily slowed the pace at which lenders are pushing forward with foreclosures. (WSJ)
Wachovia Posts Massive $24B Quarterly Loss ·
Wachovia reported Wednesday it lost $23.9 billion in the third-quarter, its third straight quarterly loss, as its mortgage-backed securities continued to deteriorate. The bank recorded an $18.8 billion impairment charge related to its planned merger with Wells Fargo. (CNN Money)
“Under Water” Mortgages Threatens U.S. Economy ·
Mark Zandi, chief economist at Moody's Economy.com, estimates that nearly one in six U.S. homeowners owe more than their homes are currently worth, threatening the U.S. economy with a new wave of foreclosures and bankruptcies in 2009. (Reuters)
Ritholtz: Blame The Lending Standards [OPINION] ·
Barry Ritholtz, director of FusionIQ, contends that the root cause of the credit crisis was an unprecedented change in lending standards from 2002 to 2007, during which time mortgage brokers had only to assure homeowners would not default for 90 days. (The Big Picture)