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Politics : The Obama - Clinton Disaster
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To: DuckTapeSunroof who wrote (8648)3/7/2009 10:51:32 AM
From: SGJ1 Recommendation  Read Replies (1) of 103300
 
I have read this particular topic thread and generally think you are on the right track here regarding the heart of the problem now. This is , when all the political finger pointing and name calling is done, the starting point where the problem can be solved. Note that it won't cost trillions of dollars either. When you get to the truth you begin to realize how far the recent political activity is from meaningfully solving the financial problem. That this relatively easy, cheap solution is being delayed is beginning to become telling as to the true motives of the current administration.

However you state:
I LIKE Mauldin's idea of something like an "Impairment Factor, or I-Factor. If a bond is likely to lose 10% of its capital, then it would have an I-Factor of 10%. An I-Factor of 0% would mean the bond should expect to see all its capital returned, and an I-Factor of 100% would mean that all the money will be lost." I agree with him that such a rating system would be very much more useful to the investor. It could tell them something valuable.

How is this any different from the futility of a bond rating? Why are Mauldin's Impairment Factors more accurate in rating a RMBS?

And:
'Mark-to-Market' would be PRESERVED. It would not be under pressure to dump it... yet much of the artificial (there, I said it!), pressure on bank's balance sheets caused by the application of this rule during a downward spiral could be reduced
M to M needs to be amended. Just say it.

More normal markets in mortgage-backed would swiftly emerge (because buyers would be back, the market depth would grow rapidly).
Yes.

Interesting side note to this is that those looking to buy banks right now are using Mark to Market against their targets to acquire a portfolio on the cheap. The buyers are those who have a good due diligence system to quantify true impairment vs. what's on the hapless bank's books. The ROR's on these are astronomical.
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