Subprime Rate Five-Year Fix Agreed by U.S. Regulators

The no risk economy continues...

But does it..

This wont stop falling house prices nor will it stop the banks from tightening credit standards.

What this does say is that 'The FED' is scared. Rate CUTs are a sure thing ..
 
Quote from Daal:

http://www.bloomberg.com/apps/news?pid=20601068&sid=asetzdsdmBUE&refer=economy

if this intervetion continues and gets worse at the expense of the bond investor look for the ABX to start to nosedive, more writedowns and more losses for the banks which will cut lending, good job paulson
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Daal, I have to agree. It's hard to tell without quantitative data, but It would seem that this kind of intervention runs the risk of decreasing even further the long-term value of all subprime related paper as opposed to a smaller set of subprime that would otherwise have been adversely affected. Certainly, no one is going to want to touch any of this subprime stuff now without getting huge discounts. And too, i imagine the subprime mortgage market will stay dried up for a long time, 5 years?. Who will want to make any subprime loans under these conditions?

I don't understand all of the ramifications here. It's obviously quite complex. But this freeze does appear at first blush to be largely political in origin rather than making financial sense overall. If these were fixed interest loans than there would be a chance for inflation over 5-years to help, but they are all variable rate. It seems that 5 years from now we will again be faced with this mess all over again. And particularly if interest rates rise between now and 5 years from now, which they are bound to do.

Is the whole idea behind the 5-year timing to have this problem blow-up again during the last year of the new Democratic Administration; assuring that the Republicans retake the Whitehouse? I hate to sound so cynical but a 5-year hold on payment hikes will do exactly that. :(
 
Quote from Reaver:

Don't forget to grab some ice water. It'll come in handy where we're going.
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There are no subprime issues in hell. You need the cold water here to cool off the politicians.
 
Well, there is a report on the net that claims Hillary sent a letter to Hank asking that the fix be for 5 years. Dumb, dumb, dumb. What was she thinking?
 
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