Word: doneness
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...gave a speech in October 2007 at a mortgage securities conference and starting talking about these issues publicly. Why did you stand up and do that? I thought they were going to throw tomatoes at me. We had done some industry roundtables in the spring of 2007 to talk about sub-prime and nontraditional mortgages. Everyone gave us all this happy talk that they were going to modify these loans, and I'm sure they meant it as the time. They said it was in everyone's economic interest to restructure the loans instead of foreclose because the losses...
Could you translate that into your concern for the banks that you insure? We have to get the housing market stabilized, and these loan modifications do need to be done systematically. It's difficult, I'm not going to say it's not difficult. We're seeing this at IndyMac. For a lot of these nontraditional mortgages, income was never verified so as part of the modification process you have to go back and verify income to know how to give them what their affordable payment will be. But it needs to be done. The FDIC did massive loan work...
...good news that Treasury Secretary Henry Paulson seems to finally be coming around to the idea that the U.S. government needs to help recapitalize our banks and should receive stakes in the banks that it bails out. But more must be done to prevent the crisis from spreading around the world. Here's what it will take...
...return, it should have voting stakes in the banks it helps. But equity injections also bail out bondholders. Right now the market is discounting these bonds, saying there is a high probability of default. There needs to be a forced conversion of this debt to equity. If this is done, the amount of government assistance that will be required will be much reduced...
...government pours money in. Thirdly, is it enough money? The banks are so nontransparent that no one can fully answer the question, but what we do know is that the gaps in the balance sheet are likely to get bigger. That is because too little is being done about the underlying problem...