We have had a remarkable day today in New York and in markets around the world, and it has seemingly turned into an equally remarkable night. According to reports, senior Congressional representatives began meeting at 7pm tonight with Ben Bernanke and Hank Paulson, having decided that the initial financial shock and awe campaign hasn’t been enough, and so now the five words that should scare any sane, thinking person: Congress wants to do something.
Call it RTC 2.0 if you like, but this is going to be something awfully big. Early numbers are in the hundreds of billions of dollars, and it will likely involving directly purchasing mortgages from over-stressed banks and lenders. That is, of course, much easier said than done with mortgages collateralized and syndicated to a thin sheen across the ownership landscape.
Nevertheless, there is remarkable political will to do something, and to do it before the November elections. Granted, there are hold-outs on each side, but at this early stage I’d say we’re looking at an RTC 2.0 something-or-another far earlier than most of us thought it would ever happen.
I should be happy, I suppose, but I’m mostly depressed and dismayed. While something is necessary, it’s tragic that it has had to come to this, and the political and economic fallout will be gigantic and long-lasting.
More here, and as news breaks.