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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (97213)	5/3/2009 7:43:23 AM
From: valueminded	Respond to of 116555

Mish: How about a simple market driven way to recapitalize the banks, allow them to correctly value the mortgage loans on the books, and not cost the taxpayers money ? Of course it is not a government driven solution so there will be a lot of people who don't like it. What do you think about: Allow banks that need capital and are holding Alt-A ect type loans to offer to the original borrower the right to buy the loan back at the value the bank has it on the books for. This would replenish the cash at the bank, (without using taxpayer dollars), establish a true value for the individual loans (lets face it a pool of loans is very difficult to value), accomplish loan modification (some of the loans would be paid off, some would be refinanced under more conventional loan writing standards, etc, etc). Yes it would not work for those who have borrowed more then their home is worth or those who used their home as an ATM and now have a mortgage worth more then their home, but those poor investments should likely be let to default - just as you would in a corporation - in order to get the economy on track. chris