Busted: Bankers and The Global Economy

May 14, 2008

Home Today, Gone Tomorrow

Apparently Sheila Bair, noble FDIC chief, likes to engage in wishful thinking like the Federal Reserve. The difference is that Ms. Bair isn’t getting much respect or cooperation. Let’s face the facts: she doesn’t have much cash behind what she says.

She stressed the need for consumers to contact counseling groups and lenders to make an effort to prevent foreclosures. At a recent foreclosure prevention event she attended in California, Bair emphasized that policymakers need to better address the plight of home buying consumers. “I think we miss the human side of how this is impacting borrowers,” Bair said, criticizing efforts by some policymakers to cast troubled borrowers as investors or speculators.

One small item that Ms. Bair is ignoring is that there is not a system in place where you can grab fist fulls of housing loans and magically change them. Each loan is separate and specific, magnified by the fact that most loans have been stuffed, sorted and bundled into hundreds of thousands of bond securities that are privately held by just as many investors. The nightmare is intense and unrelenting.

In fact, if homeowners refuse to answer the phone or reply to past due mortgage statements, little can be done on the part of the banking community. Foreclosures will happen in these circumstances.

The human side is that foreclosures require the cooperation of both sides. Bankers and home buyers must be intensely interested in keeping the loan alive. Wholesale loan modifications are not a possibility in sound or unsound finance.


  1. You know, I have to tell you, I really enjoy this blog and the insight from everyone who participates. I find it to be refreshing and very informative. I wish there were more blogs like it. Anyway, I felt it was about time I posted, Ive spent most of my time here just lurking and reading, but today for some reason I just felt compelled to say this.

    Comment by Tony Orlando — May 14, 2008 @ 7:44 pm

  2. Exuberant says : I absolutely agree with this !

    Comment by exuberant — June 2, 2008 @ 9:52 am

  3. The FDIC said today they were implementing a plan to help 2.2M of the 4.4M of Homeowners in trouble. This means 50% will not qualify to get modified. They will need a way out of those properties. We have to help those who do not have the income to stay in their homes, we should allow for easier assumptions of existing loans.

    This also means our window to buy REOs at unbelievable prices will not be here forever. The flow of new REOs will slow down and the housing market will stabilize once the excess inventory is absorbed.

    Comment by Alexis McGee — November 14, 2008 @ 6:00 pm

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