Friday, Nov 30, 2007
Will this happen here in the UK?
The Wall Street Journal online: U.S., Banks Near A Plan to Freeze Subprime Rates
WASHINGTON -- The Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, according to people familiar with the negotiations.
Posted by novice @ 04:26 PM (692 views) Add Comment
6 Comments
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1. george monsoon said...
They just make up their own rules as they go along.....!
2. Ttimgg said...
Mish Shedlock has a good blog post on this. (globaleconomicanalysis.blogspot.com). He points out that it removes any incentive for ANYONE to pay the full rate - if you want a freeze, just stop paying the mortgage, and the lenders will bend over backwards to avoid taking possession of your falling asset. It can't work.
3. the reaper said...
the dutch finger in the dyke story was 19century urban myth.Has noone told hank that?
4. Quiet Guy said...
I don't think that the Fed and the mortgage "servicers" can avoid the credit crunch endgame but they can postpone the pain for a little while (hint: think election dates).
I wouldn't be surprised if our PM tries his hand at a little market manipulation as well.
When reading this story, I feel like a poker player who has just shown the decisive winning cards (not buying near the peak) only to watch while the other players start muttering that they want to change the rules for this round.
"Exactly which borrowers will qualify for the freeze and how long the freeze would last are yet to be determined. Under one scenario, the freeze could run as long as seven years."
So the losers will be declared the winners?
5. Ihopeitgoeswithabang said...
It should read " The Bush Administration, the major financial institutions and Baldrick are close to agreeing a 'cunning' plan .... "
It seems a fiscal policy is worth nothing when it comes to trying to protect your ass from the voters.
I wonder how much of it is just talk and how much of it will actually make any difference whatsoever.
6. stillthinking said...
This is transferring payments on debt voluntarily entered into to the general population, so hardly fair. Given that all Americans are in debt anyway, just to varying degrees, they can't even move their dollars out.
I think we are doing that in the UK, because out of the 30 billion Northern Rock has been given, the existing plans only offer to pay back 12 billion, and in the future I wouldn't be surprised if this was written off. The cash to NR was a subsidy to the whole banking sector, because the NR deposits were moved to other banks.