Quick Thought: Irrational Politicians?
Isn’t this just like politicians… Now that they are bailing out some “too big to fail” firms and starting up a mass-produced bailout, why are they buying securities? Shouldn’t they be bailing out homeowners? They vote. If a bank is carrying loans, or securities, on their books at seventy cents on the dollar then why not give the borrower enough to pay the loan off (assuming it’s mark is it’s current principal value)? Anyway, by forgiving the loan, the potential exists for a C.D.O. to be paid down too–don’t forget they are securitizations of securitizations.
Maybe using taxpayer money to have the newly taxpayer-owned G.S.E.’s (more than sponsored, I suppose) make a loan to them at a much lower rate )obviously for the lower amount)? Honestly, seems illogical to go around bailing out financial institutions when those benefits are perceived to be more concentrated … More benficial to people who caused the problems rather than those who stand to lose the most from them.
Anyway, just my thought on this “bailout” …