The Fed now accepting mortgage debt as collateral for loans: Clear Subprime bailout?

See whether you agree or have different takes on this:

Let's see who is getting what so far.

The MBS mess started late last summer but why is it a mess? Because a few large IB banks got stuck with a quarter or two of securitizations they couldn't sell. All of a sudden saps and bagholders vanished. So just a few months of toxic waste production damn near crippled them.

So let's say 20 big IB/dealer sized banks get 200B or get to get 200B of wildly swinging valuations off their balance sheets.

Next we have 150M, say, taxpayers of which let's say half get 158B stimulus.So the little people get 800$ checks or whatever it is.

But who has the other 3 and 1/2 years of toxic waste assuming that the really insane lending was mostly 2004 on down?

Who are they? Will they get anything I wonder? Can this mess end if they refuse to come forward and be counted?
 
Wise words from someone who blew up while sucking on the Shony tit. You rock on superstar

Quote from EMRGLOBAL:

SOCIALISM AT ITS FINEST!


And there are very few "PERMA BEARS" on ET. Most of ET are PIKERS trading 5k accounts and yelling "Sky's the limit".

Facts madam, just the facts.
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Quote from Trader5287:

See whether you agree or have different takes on this:

Let's see who is getting what so far.

The MBS mess started late last summer but why is it a mess? Because a few large IB banks got stuck with a quarter or two of securitizations they couldn't sell. All of a sudden saps and bagholders vanished. So just a few months of toxic waste production damn near crippled them.

So let's say 20 big IB/dealer sized banks get 200B or get to get 200B of wildly swinging valuations off their balance sheets.

Next we have 150M, say, taxpayers of which let's say half get 158B stimulus.So the little people get 800$ checks or whatever it is.

But who has the other 3 and 1/2 years of toxic waste assuming that the really insane lending was mostly 2004 on down?

Who are they? Will they get anything I wonder? Can this mess end if they refuse to come forward and be counted?
More...

American companies quit buying it 2004. The Chinese, Arabs, Japanese and Europeans got stuck with the post 2004 stuff.

John
 
Quote from crgarcia:

"...after the Fed said it would lend primary dealers up to $200 billion in Treasury securities and allow them to use agency and mortgage debt as collateral."

http://biz.yahoo.com/rb/080311/markets_forex.html
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They did this back in August as well, and back then they had a lot more options than they do this time. I suspect that the trap we have in place today is pretty powerful, so we rally for several weeks, maybe even a month or two, but the structural problems remain unchanged and ultimatly the market heads back lower.
 
Quote from Trader5287:

No, can't happen absent your default as a homeowner.

And for the gummint to wind up with it - you'd have to default and so would the bank that took an infusion under the new program.

The problems in OH are a different thing - mostly mortgages moving around without be properly assigned from lender to lender to lender.... .
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So what happens if the so called AAA MBS paper has 6% mortgages in default and they are foreclosed.
 
Quote from EMRGLOBAL:

SOCIALISM AT ITS FINEST!


And there are very few "PERMA BEARS" on ET. Most of ET are PIKERS trading 5k accounts and yelling "Sky's the limit".

Facts madam, just the facts.
More...

Oh I get it, your opinion doesn't qualify if you have a 5k account. So the more money you have in your account, the more your opinion matters. Just another day of arrogant bs on ET.
 
Quote from Trendytrader:

So what happens if the so called AAA MBS paper has 6% mortgages in default and they are foreclosed.
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Still nothing. That paper is still worth, or not worth, what it ever was.

The difference is (1) the MBS is not sitting on the Bank's books doing untold damage* and/or (2) the Bank got the gummint's treasury bond which it can convert to cash to make its books look better and hopefully make it more inclined to become a participant in the mortgage credit markets again. **

Meanwhile on Main Street nothing changes. If you dont pay, the servicer for the MBS pool takes your home.

Nothing changes for the pool investors either. They still get paid, or not paid, based on the payment performance of the pool of borrowers whose mortgages comprise the pool.


* Not sure about this - what the accountants do. Whether teh waste is truly "parked" off the Bank's books.

** The loans are for 28 days but I imagine the Banks will just keep rolling the loans over and over. Now as time goes on 30 years into the future (if the pool was 30 yr. mtgs.) the mortgages comprising the pool will get paid, refinanced, foreclosed, etc.) and the value of the gummint's collateral will fall. Does that matter? Probably not - yesterday's extraordinary measure is a recognition that this waste isn't worth jack shit anyway - taking it as collateral is just feel good windowdressing.
 
Quote from Brandonf:

They did this back in August as well, and back then they had a lot more options than they do this time. I suspect that the trap we have in place today is pretty powerful, so we rally for several weeks, maybe even a month or two, but the structural problems remain unchanged and ultimatly the market heads back lower.
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Wrong!

The FED did not do anything close to this operation back in August.
You need to check yourself AND the facts.
 
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