Re: [RLC-Action] RLC: "NO Bailout for Failure, NO Rescue from Risk"
If this is a bailout, then who's getting bailed out? Seems to me this is more of a liquidation. Liquidators (competent liquidators, anyway) make money on the deal.
For example, my next door neighbor bought her house for $400K two years ago. Today she is trying to sell it for $237K -- roughly 60 cents on the dollar. I think that's a fair price. I bought my slightly bigger house next door to hers in 2003 for $220K, before the big run up in prices. If I could get a loan for $200K today, I would plunk down 20% and buy the house myself. The rent on that house would barely pay for the mortgage/taxes/insurance. Her house is in great shape (better than mine).
But I can't get a loan. Banks are reluctant to lend to anybody. If the gov't wants to buy distressed MBS's for 25 or 50 cents on the dollar, they'd be getting a better deal than even I would be willing to pay for my neighbor's house. I don't see the problem.
That said, all you wrote about the scandalous protection of incompetence at the GSE's is accurate, but irrelevant. It would be great if we could get the truth out about the boobs who allowed this crisis to develop, who actively obstructed reform. As Barney Frank, in my mind the chief perpetrator has said, "Good luck with that".