Slick Willie Calls For Broad Principal Mortgage Writedowns
Bill Clinton, in what appears to be an attempt to succeed where the IEA failed so miserably to score some brownie points for the president, told Bloomberg's Al Hunt during an interview, that Bank of America Corp.’s accord with mortgage-bond investors may give more “underwater” homeowners a chance to cut the principal on their home loans. "You’d relieve the anxiety of countless Americans who would know they could hold onto their homes." That you would also bring moral hazard to the masses and demonstrate to the public that the alternative of prudent monetary management is not insolvency, but yet more bailouts, apparently was lost on the slick one. And confirming that he still has no clue how anything in the ponzi system works, he added: "You lift not only an economic, but a psychological burden off of the homeowners and the banks,” he said. “And we’re free to start lending again, we’re free to engage in normal economic activity." Apparently marking down one's assets, which would in turn lead to massive Tier 1 capital (as artificial as it may be) erosion, and a need to funnel hundreds of billions of new cash in on the balance sheet, while at the same time setting off a chain reaction whereby everyone else is forced to remark their assets (all currently at par thanks to FASB encouraged Mark to Unicorn), an act which QE 1, Lite and 2 have been doing all they can to avert, is stimulative to "lending". And this is the thought process of the person credit with generating the last American budget surplus...
This is one of those rare occasions when one must commiserate with Brian Moynahan:
Brian T. Moynihan, 51, the chief executive officer of Charlotte, North Carolina-based Bank of America, said in April that “we do not see broad-based principal reduction as a sound policy decision” for the country.
“It’s hard to see how we could justify reducing principal for many delinquent customers who represent a small portion of borrowers, but not for the vast majority of our customers who have stayed current on their loans,” he said in the prepared text of a speech.
There really is nothing more to say on this one. Which means that Clinton's "modest proposal" will likely be enacted very shortly.
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