Friday, September 19, 2008

Treasury to socialize entire mortgage loss

Complexity has won! More precisely, fear of systemic failure due to overcomplexity has trumped fear of moral hazard.

Is the overcomplexity due to insufficient regulation?

We're going to put the whole mess on the US and taxpayer balance sheet. Paulson estimated hundreds of billions, but it could easily be a trillion. It all depends on home prices.

WSJ has a nice blow by blow account of the last week of crisis, focusing on key players like Paulson, Thain, Fuld, etc. (See also here.)

WSJ: ...In a private meeting with lawmakers, according to a person present, one asked what would happen if the bill failed.

"If it doesn't pass, then heaven help us all," responded Mr. Paulson, according to several people familiar with the matter.

Paulson statement

4 comments:

David said...

The King is dead! Long live the King!

wolfgang said...

How much will the CEOs and former CEOs contribute to the bailout fund(s) ?

mock turtle said...

we are screwed. the proposed legislation, so far, is all top down

gives the treasury secretary unlimited power to do what ever he thinks necessary in the way of buying securities from distressed firms "without limit"

he can subcontract to whom ever he wants and promulgate what ever regulations he sees fit according to the proposed legislation.

my solution...first help the home "owners" and for a while let the banksters and over payed moneychangers and their miscreant insitutions suffer.

help should be in the form of loans, subsidies, and some cases the outright purchase of real property that is in or about to be in default!!! flippers and speculators excluded.

this way the government would have a direct interest in real property, would be in a position to claim collateral in the even of "owner" walk aways (jingle mail)

under treasry secretary paulson and the Bush administrations plan the government, ie the taxpayer is left with nothing but promises, securities that are essentially derivative and have no intrinsic value

if this is really a subprime / mortgge problem then let the solution trickle -up!

we are all so......ed

read the legislative language proposed and related issues at

mike sheddlocks excellent blog (global econ analysis)...or at the blog calculated risk

http://globaleconomicanalysis.blogspot.com/

http://calculatedrisk.blogspot.com/

then email your senators and you representative

Nail Clipper said...

Well I g

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