FDIC Organizes LTCM-Style Meeting Over Subprime

Imagine this headline “[Banks, Regulators, and Execus] Trying to Keep Borrowers in Homes” rewritten to be about credit cards. Would it be different than what is being proposed by some to save home-owners in over their heads on subprime mortgages?

A high-level group of federal officials, bankers and mortgage industry executives meeting Monday agreed on a goal of keeping deserving borrowers with high-risk mortgages in their homes at a time of rising foreclosures, a key banking regulator said.

Bair organized the unusual seven-hour meeting at FDIC headquarters on the turmoil in the market for so-called subprime mortgages, which are higher-priced home loans for people with tarnished credit or low incomes who are considered greater risks. In recent weeks, the distress has roiled financial markets and stoked anxiety that it could spill over into the broader economy.

Related posts:

  1. The Silicon Valley of Subprime
  2. The “Oh Shit” Board Meeting
  3. Michael Lewis on Subprime Mortgages
  4. Cross-National Comparison of Mortgage Markets
  5. Avoid Any Meeting Requiring a Nametag

Comments

  1. Peter Clark says:

    Why imagine when you can edit …
    “[Banks, Regulators, and Execus] Trying to Keep Borrowers in Cadillacs
    A high-level group of federal officials, bankers and lending industry executives meeting Monday agreed on a goal of keeping deserving borrowers with high-risk auto loans in their Cadillacs at a time of rising repossessions, a key banking regulator said.
    Bair organized the unusual seven-hour meeting at FDIC headquarters on the turmoil in the market for so-called subprime auto loans, which are higher-priced car loans for people with tarnished credit or low incomes who are considered greater risks. In recent weeks, the distress has roiled financial markets and stoked anxiety that it could spill over into the broader economy.

  2. Andy Nelson says:

    An LTCM type process would be the opposite of fairness, transparency and market efficiency. I’ve always found it interesting that Clinton directed the fed to bail out LTCM, and when Bush was faced with a similar situation he let Enron twist in the wind. The comparison is harsh because we don’t know if anyone at LTCM was a criminal, but that’s my point.
    I don’t think they care about borrowers in their homes. I think they are more concerned about cascading defaults. The point of securitizing mortgages was to chop them up and parcel them out to investors based on risk tolerance. I don’t see any reason not to let the situation play out.
    Someone should be working on a plan to securitize repossessed homes, and the government can throw in some kind of program to make it easier for incumbent residents to remain in tenancy.