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Ethical Solution to Mortgage Crisis: De-Bundle Loans and Identify Known Risks

Tuesday 30 Sep 2008 | Blog-Editor | Economics, Gov't Reform, Politics |

One Response to “Ethical Solution to Mortgage Crisis: De-Bundle Loans and Identify Known Risks”

1. 1) |  Top | Oct 01 2008 | Banescu

   As much as I dislike George Soros’ politics, he raised a valid point that supports my suggestion:

   Soros has emerged as a harsh critic of the Treasury Department, especially of Paulson’s proposal for the government to buy $700 billion of distressed mortgage-backed securities to restore the flow of credit in the financial markets.

   [...]

   “The two main principles are to inject more cash into the securities market and shore up home mortgages,” said Moran, who has been briefed on the proposal. “He thinks it has to be more direct than the government buying up tranches. He doesn’t think the government should be buying up toxic stock.”

   [...]

   Soros has fiercely criticized Paulson’s proposal.

   “Mr. Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information,” Soros wrote in a Financial Times op-ed dated Sept. 24. “The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up in the dregs.”

   Soros would like the government to restore the flow of credit to the financial markets by purchasing equity in companies saddled with distressed assets, said Moran.

   Soros floats alternative bailout plan with Dems
   http://thehill.com/leading-the-news/soros-floats-alternative-bailout-plan-with-dems-2008-09-30.html