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Big Banks in Trouble: Huge Mortgage Write-Downs Seem Inevitable

Most people don't even know what the "current" value of their house is. ]

Maybe not... while they're current. But they take a KEEN interest in how much they owe once they do fall behind on payments. Don't think for a minute that people aren't doing the math to see if the LTV is within their tolerance level.

Many borrowers were stupid enough to take the loan they were given. But they're not stupid enough to keep it.

Ken Lewis: The Government Made Me Do It!

Actually no, the people are NOT the government.

Perhaps they should be, but they're not. And they haven't been for a long time.

OTOH, perhaps they should not be. So many of those who vote have absolutely no grasp of the issues at hand. We've brought this on ourselves by relinquishing / "delegating" the repsonsibility of monitoring important affairs.

And no, watching Colbert, The Daily Show, and the Tonight Show do not qualify as keeping oneself informed.

Credit Card Legislation: An Exchange

Having been "bitten" by the credit card industry twice previously because my "risk profile changed," even though payments were always made on time, and OTOH, having built businesses using cc's as a funding source, I'm ambivalent on this legislation.

The use of debt to purchase consumer goods is foolish and wasteful. The best solution is to pay the damned things off and refuse to use them. A massive wave of payoffs and shrinkage in average balances would have eventually solved this problem.

IMO, this legislation serves to keep people in shackles, because the "lower" interest rate will give them less impetus to pay the balances off.

Will the FHA Be the Next Government Bailout?

IME, they're making bad loans.

I'm seeing more FHA borrowers than before. This is probably due to the fact that FHA market share has increased, and the first wave of the sub-prime/ARM situation has subsided.

But when I look at the numbers these homeowners have, it's clear to me that these were "at the margin" loans, made to people who didn't have much of a monthly surplus to begin with, much less any reserves.

Add to this the continued weakening in the economy, and you've got more of a mess on your hands than we would have already had.

Furthering the Discussion on Bank Nationalization

[How can we get through to Washington? They don't seem to be considering the nationalization option for insolvent banks.]

The unspoken assumption here is that "Washington" gives a rat's patoot about what's good for the country.

That assumption is false.

Is the U.S. Banking System Safe?

[Home prices have historically tracked inflation and are likely to revert to the mean. ]

I agree with NY above that inflation is going to accelerate, but with all of the reasons that housing prices have to continue to decline, I'm wondering if house prices may decouple from that measure.

Banking Sector: Band-Aids Just Won't Do It

[Investors in junior securities, be they common shares, preferred stocks or subordinated debt, enjoy premium returns in the good times and bear disproportionate risks in the bad. They should not have a seat at the table in a bail-out scenario. ]

Should not, but do anyway. They managed to squeeze out a ride-along amendment to the housing bill, so they get to share in future appreciation. Do you suppose they'll now leave their seat at the table?

New Lender Guidelines To Help Struggling Homeowners

[and would in most cases receive a final decision on whether they will receive help with their loan within 45 days.]

They're already far, far, very, very far short of this standard.

This new plan appears to be a combination of "nothing new" and promises that can't be kept.

They say that they'll "consider" things... such as principal reduction... when the recent Boston Fed paper clearly states that such a consideration makes no sense.

I love how these announcements really say nothing at all.