mhspring's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/250371/comments http://seekingalpha.com/article/97524-paulson-s-plan-is-about-marking-to-market?source=feed#comment-266784 266784 Why not let institutions separate their MBS holdings into 2 groups: hold for sale and hold for maturity. Held for maturity securities would be valued on the books at mark to model prices with impairment write-offs taken based on actual impairments. Held for sale securities would be marked to current prices. Any government purchase-based bailout would apply only to held for sale securities. An FDIC-like insurance program paid for by the participating institutions could be instituted to further bolster the value of the held to maturity securities group. Any institution wanting to move securities to the held for sale group from the held to maturity group would have to take an immediate write-down if this occurred before the panic has subsided. Other penalties could possibly be applied.
This proposal would significantly reduce the value of the securities that the government would have to purchase. It would reduce the number of institutions failing because of mark to fire sale market prices. It would buy the necessary time for the part of the current panic due to MBS valuations to subside.
Neither the above proposal nor, to my knowledge, any aspect of the currently proposed bailout package deals with credit default swaps in any way, shape or form. This form of toxic derivative waste needs to be dealt with as well since the notional value of CDSs is in the tens of trillions. CDSs were a major contributor to the failures of Lehman and AIG.]]> Sat, 27 Sep 2008 10:25:29 -0400 Why not let institutions separate their MBS holdings into 2 groups: hold for sale and hold for maturity. Held for maturity securities would be valued on the books at mark to model prices with impairment write-offs taken based on actual impairments. Held for sale securities would be marked to current prices. Any government purchase-based bailout would apply only to held for sale securities. An FDIC-like insurance program paid for by the participating institutions could be instituted to further bolster the value of the held to maturity securities group. Any institution wanting to move securities to the held for sale group from the held to maturity group would have to take an immediate write-down if this occurred before the panic has subsided. Other penalties could possibly be applied.
This proposal would significantly reduce the value of the securities that the government would have to purchase. It would reduce the number of institutions failing because of mark to fire sale market prices. It would buy the necessary time for the part of the current panic due to MBS valuations to subside.
Neither the above proposal nor, to my knowledge, any aspect of the currently proposed bailout package deals with credit default swaps in any way, shape or form. This form of toxic derivative waste needs to be dealt with as well since the notional value of CDSs is in the tens of trillions. CDSs were a major contributor to the failures of Lehman and AIG.]]> http://seekingalpha.com/article/95614-market-skepticism-about-bofa-merrill-deal?source=feed#comment-255633 255633 ]]> Tue, 16 Sep 2008 06:08:08 -0400 ]]> http://seekingalpha.com/article/92347-fannie-freddie-beyond-the-balance-sheets?source=feed#comment-238177 238177 In an ideal world, there would be no GSEs. We don't live in such a world so we are stuck with them and have to keep them afloat at least until the housing market recovers. The common could go to zero but the consequences of letting the pfds go bust will be dire of the loss of bank capital.
BTW: how much of the current crisis is caused by institutions having to mark-to-market securities that are clearly being held to maturity?

]]> Mon, 25 Aug 2008 05:34:32 -0400 In an ideal world, there would be no GSEs. We don't live in such a world so we are stuck with them and have to keep them afloat at least until the housing market recovers. The common could go to zero but the consequences of letting the pfds go bust will be dire of the loss of bank capital.
BTW: how much of the current crisis is caused by institutions having to mark-to-market securities that are clearly being held to maturity?

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