Doug wrote: > Julio, the banks are largely out of capital. How do you recapitalize > them? That's the point of this bailout.
The mortgage backed securities they or their borrowers hold, worth little currently, will regain a decent market value. Because the markets would then expect the mortgages to be serviced normally over the next few years. That's what the government would guarantee. Say that the prices of the pyramid of assets built on top of the MBS doesn't get nearly as high as it was at its peak, so the banks are still somewhat short in capital. That wouldn't be so bad. They could cut some of their fat (high salaries, bonuses, etc.) and get creative. Anyway you look at it, working on the poor borrowers is a cheaper way to re-capitalize the banks, compared to the alternative. I'm serious about this. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
