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Politics : Formerly About Advanced Micro Devices
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To: bentway who wrote (360922)12/2/2007 12:40:08 PM
From: tejek  Read Replies (1) of 1576398
 
Here's another problem. Someone is going to have to foot the bill for this. Banks and associated entities that will, over the short term, finance this homeowner bailout are not going to do it out of the goodness of their hearts. Reported Hope Now Alliance honchos like Countrywide and Citigroup (NYSE: C) are, I'm certain, only doing this because they hope it will be cheaper than having to pay up for their lending sins all at once. Moreover, it gives them a chance to look like good guys who care about the commoners -- never mind the fact that they were quite happy to fleece borrowers with gawd-awful mortgage "affordability products" for years.

The people who will foot the bill are the investors who bought those mortages during the go go years. If the interest rates are reset lower, the banks will still make money assuming the feds lower the fed rate which is inevitable. Please note that this plan was announced right after Citadel bailed out ETFC by buying their mortgage crap for $.25 on the dollar. Up until then, everyone was afraid to price the junk. Now that Citadel has done it, the feds know the bottom line and have acted. The Resolution Trust was a similar gambit. Not acting would have been the height of stupidity. And trust me, I am no fan of the people who got us into this mess.
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