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Ash4781

'gold Standard' Plan For Mortgage Securities

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Plans to introduce a “gold standard” for mortgage securities are to be considered this week. The Treasury will look at the proposals as part of an interim report to be submitted to Alistair Darling tomorrow.

Sir James Crosby, deputy chairman of the Financial Services Authority and formerly the chief executive of HBOS, the troubled mortgage provider, was commissioned by the Treasury to look at options for improving the mortgage-backed securities (MBS) market, which imploded last year at the onset of the credit crisis.

Mortgage-backed securities underpinned a third of all new mortgages until last year. Today, the market remains closed.

Sir James is thought to be considering the idea of a “gold standard” for mortgage-backed securities as a way of encouraging a broader stable of investors to buy the assets, although details of the scheme were unclear last night. Treasury sources said that another option being considered was for the Bank of England to accept as securities new mortgages that have been written since the credit crunch.

The Bank threw the troubled mortgage market a lifeline this year by agreeing to swap mortgage securities, issued until October 2006, for Treasury bills that could then be used in the market as a way of raising new funds.

However, the solution dealt only with the overhang of assets and did not provide a kickstart to get the market moving in future. Last night Treasury sources emphasised, however, that any such intervention would be a “temporary measure” only. The sources said that Sir James had been asked to find other sources of financing as well as improve the robustness and transparency of the overall market. A full set of proposals for the mortgage market will be delivered in the Pre-Budget Report later in the year.

Despite spending months consulting with mortgage industry experts, including banks, building societies and other specialist lenders, Sir James is expected to tell the Chancellor that “no clear consensus” has emerged on how best to tackle the problems in the wholesale funding markets.

When the review was launched in April, Sir James said that he wanted to find market solutions to the problem. “These difficulties stem from problems in the markets, so to be effective any proposals to deal with them must be market-developed and market-led”, he said.

http://www.timesonline.co.uk/tol/money/pro...icle4368999.ece

I thought this guy was coming up with 'the plan' ?

But alas there is no plan

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http://www.timesonline.co.uk/tol/money/pro...icle4368999.ece

I thought this guy was coming up with 'the plan' ?

But alas there is no plan

My guess is that they originally thought they could have a Fannie Mae in the UK. Fannie is of course a forerunner to the SIV.

I dont think they were impressed with the bailout, the model has failed and may well take down the US Economy with it. we dont need that, we got the FSA to really allow banks to foul things up already.

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When the dot com bubble popped there was no plan to socialize those companies in order to keep their share prices up. They were just allowed to fail. Now we have house prices at unreasonable levels they do all they can to maintain them at those levels.

If these mortgages has value they could be sold. If they cannot be sold it means they have zero value. They can be sold, just not at the face value they want. Since they refuse to sell them at the correct price, they have decided to ask the BoE to buy them at silly prices. What this means is the taxpayer buys at above market prices.

The householder pays extra tax but gains from the increased value of the house. The non house owner pays the tax and is prevented both from saving and buying a house at a fair price. It is a tax on the poorest people, the poorest do not own houses. Even the average house owner does badly, his house is more expensive but so is the one he wants to move to. The big winners are the elderly who are downsizing. They have gained the most from the house price boom, they probably are retired and don't pay tax anyhow. Thus it is a tax on the young to benefit the old. Guess what, most MP's are old, so expect it to be passed.

Its not enough to succeed, you have to pull the ladder up after you so that nobody else can succeed.

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Isn't it ironic that politicians talk of 'golden rules' and 'gold standards' in this and that, whilst never mentioning Gold itself.

They should re-brand them 'barbaric relic' rules and standards, but that would require some intellectual honesty so perhaps not.

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The big winners are the elderly who are downsizing. They have gained the most from the house price boom, they probably are retired and don't pay tax anyhow.

I was under the impression , perhaps incorrectly , that a pensioner over 65 paid tax on any income over £9,030 a year .

State pension is included in this figure afaik .

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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