Kohn's Testimony & Bernanke's Principal Mortgage Reduction Plan
The Donald Kohn Head... (2nd half 07) bank holding companies (BHCs) experienced a substantial deterioration in asset quality and earnings,
largely attributable to the effects of the slowing residential housing market on the quality of mortgage and construction loans.
The combination of sizable write-downs and substantially higher provisions for loan losses in response to deteriorating loan quality resulted in weaker profitability
Bank holding companies will continue to face challenging market conditions and persistent pressure on earnings.
More asset write-downs are likely as the market continues to adjust risk premiums and valuations change.
Benny & The Feds...
Delinquencies and foreclosures likely will continue to rise for a while longer, for several reasons.
First, supply-demand imbalances in many housing markets suggest that some further declines
in house prices are likely, implying additional reductions in borrowers' equity.
Second, many subprime borrowers are facing imminent resets of the interest rates on their mortgages.
In 2008, about 1-1/2 million loans, representing more than 40 percent of the outstanding stock of subprime ARMs, are scheduled to reset.
At the national level, the rise in expected foreclosures could add significantly to the inventory of vacant unsold homes
already at more than 2 million units at the end of 2007--putting further pressure on house prices and housing construction.
Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.
The Nattering One muses... so Benny wants to avoid "margin calls" on overleveraged borrowers
by giving them back equity in the form of principal reductions gratis from the lenders?
Just what we need more socialism for the nationalized housing industry (the GSE's FHA, FHLMC & FNMA now control virtually all home lending.)
Where was Benny on Friday when Peloton Partners were forced to unwind a $9 billion hedge fund because of margin calls, driving the DJIA down 315 points?
As we have so aptly noted in these pages... So much for capitalism and Adam Smith's invisible hand of the market.
The whole housing debacle has demonstrated that at the first sign of failure, capitalism jumps out the window for cronyism and socialism.
All the safety nets being thrown about and Barney Frank bailouts are a testimony to this fact.
I have three words for Benny and the Feds, no not, GO F*CK YOURSELF, but the simple fact that there are NO FREE MARKETS.
ALL markets and their asset pricing are to some degree, controlled, contrived and thus, can be manipulated.
A "free market" is just like a yeti sighting, "peak oil" and shape shifting alien lizard conspiracies...
AN URBAN MYTH for the consumption of the naive and foolish.
largely attributable to the effects of the slowing residential housing market on the quality of mortgage and construction loans.
The combination of sizable write-downs and substantially higher provisions for loan losses in response to deteriorating loan quality resulted in weaker profitability
Bank holding companies will continue to face challenging market conditions and persistent pressure on earnings.
More asset write-downs are likely as the market continues to adjust risk premiums and valuations change.
Benny & The Feds...
Delinquencies and foreclosures likely will continue to rise for a while longer, for several reasons.
First, supply-demand imbalances in many housing markets suggest that some further declines
in house prices are likely, implying additional reductions in borrowers' equity.
Second, many subprime borrowers are facing imminent resets of the interest rates on their mortgages.
In 2008, about 1-1/2 million loans, representing more than 40 percent of the outstanding stock of subprime ARMs, are scheduled to reset.
At the national level, the rise in expected foreclosures could add significantly to the inventory of vacant unsold homes
already at more than 2 million units at the end of 2007--putting further pressure on house prices and housing construction.
Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.
The Nattering One muses... so Benny wants to avoid "margin calls" on overleveraged borrowers
by giving them back equity in the form of principal reductions gratis from the lenders?
Just what we need more socialism for the nationalized housing industry (the GSE's FHA, FHLMC & FNMA now control virtually all home lending.)
Where was Benny on Friday when Peloton Partners were forced to unwind a $9 billion hedge fund because of margin calls, driving the DJIA down 315 points?
As we have so aptly noted in these pages... So much for capitalism and Adam Smith's invisible hand of the market.
The whole housing debacle has demonstrated that at the first sign of failure, capitalism jumps out the window for cronyism and socialism.
All the safety nets being thrown about and Barney Frank bailouts are a testimony to this fact.
I have three words for Benny and the Feds, no not, GO F*CK YOURSELF, but the simple fact that there are NO FREE MARKETS.
ALL markets and their asset pricing are to some degree, controlled, contrived and thus, can be manipulated.
A "free market" is just like a yeti sighting, "peak oil" and shape shifting alien lizard conspiracies...
AN URBAN MYTH for the consumption of the naive and foolish.
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