 Quote:
Originally Posted by Retire Soon
We will all suffer from what happened today. There is no such thing as a free lunch.
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I'm not saying that I agree with the steps taken today - there is a rather perverse reward that favors those with the worst credit history. This is very disturbing. But coming up with a way to give borrowers more time to negotiate alternatives seems like a good idea. When time constraints are relaxed in financial crises it usually helps. Five years seems like too long, but maybe that's quibbling.
I'm just saying that a couple of the arguments against the solution don't hold water:
1. That the government is interfering and breaking a contract, when in fact by defaulting on a loan a borrower will be breaking the contract anyway. The CDOs are already trading as if more contracts will be completely broken than perhaps can be reasonably expected.
2. That this will damage the secondary mortgage market when this market has already been terribly damaged. The banks, brokers, rating agencies, etc. have already had their credibility destroyed.
Audrey
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