Word: loaned
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Such programs are great news for real estate agents and builders. But it's not clear how much these ideas would help housing overall. Nearly one-fifth of all borrowers owe more than their house is worth. They couldn't sell their home and pay off their loan even if they wanted to, and that's not a problem that goes away by simply slowing the pace of the fall...
...wait, there's more. Unlike other CDOs, Strata is a so-called single tranche CDO. Most CDOs own hundreds of millions of dollars of loans. Those loans are pooled together and then various bonds are sold based on the portfolio. But all the bonds are not the same. They are stacked based on risk. The highest tranche bond gets paid its dividends based on the first loan payments that come in the door. Bonds at the bottom of the stack get paid last, which means those investments are wiped out first if borrowers fail to pay back their loans. Those...
...securitize mortgages that should not have been made in the first place), the emergence of government bailouts, and the overall shift to a more state-involved economy, we are beginning to see free-market assumptions wither away. Banks no longer must perform meticulous cost/benefit analyses for each and every loan or investment they make, and troubled financial firms can afford to take on even more risk knowing that the government and the American taxpayer will have their backs...
...Treasury Department, in its panic over the collapse of banks on Wall Street, rushed to get TARP out the door - no doubt about it. The government didn't require banks to keep track of the money, report how they were spending it or loan it out to free up credit markets. But it's not all bad news. The fact that the special inspector general's office exists is an important sign that the Treasury Department realized the limits of its abilities. Recent and future TARP outlays have a whole new set of stringent reporting requirements. The inspector general...
...particularly troubling TARP program called Term Asset-Backed Loan Facility that lets companies borrow money using asset-backed securities as collateral: "Treasury should consider requiring that some baseline fraud prevention standards be imposed (such as minimum underwriting standards or some other combination of provisions that will minimize the risk of fraud...