What is our Fed Chairman Ben Bernanke doing to walk us out of this Credit Crunch?
Here's what he had to say in a letter to Senator Charles Schumer, D-N.Y. [You can read the rest of the article by Market Watch here]
"It might be worth considering at this juncture whether the private and public sectors, separately or in collaboration, could help the situation by developing a broader range of mortgage products which are appropriate for low-and moderate-income borrowers, including those seeking to refinance.
Such products could be designed to avoid or mitigate the risk of payment shock and to be more transparent with respect to their terms. They might also contain features to improve affordability, such as variable maturities or shared-appreciation provisions for example."
If you read Ana Connell's post on The Week Ahead, you're well aware that Federal Reserve Chairman Ben Bernanke is scheduled to speak at the Federal Reserve Bank of Kansas City's Economic Symposium at Jackson Hole, Wyo. Here he'll talk about issues on housing and related financing issues.
Moving ahead to September 18th's FOMC meeting, if we proceed forward with sentiments expressed in this letter, the overall consensus is an expected Rate Cut.
You must admire his creative thinking for venturing into ways to ease the furthered fiasco down the road ahead (It's estimated that in December 2008, $800 Billion subprime ARMs will adjust and 68% of these loans will default! [Statistical source unknown; but I'll find it]). BUT...
- Wasn't it the low-and moderate-income mortgage financing products that got us into this mess?
- How would shared-appreciation provisions work and do they take into account instances of market depreciation?
As good colleague Bryant Tutas would say, "What Say You?"
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