Hmmm….so your saying 20% of these mortgages are heading to default. What do you think commercial paper with a 20% default rate is fetching on the open market today? Probably a lot less than 25 cents on the dollar. Probably more 5-10 cents on the dollar. Does anyone have the data on this? THanks

You clearly don’t understand how this bailout works.

BTW if I could buy commercial paper with a 20% default rate for 5 cents on the dollar, I’d go all in, it would be the investment of the lifetime. Just think about it. $50,000 buys you 10 mortgages for $100,000 each. 2 of them are going to default and you “only” get 60% of market value of the underlying house through foreclosure. The remaining 8 will honestly pay (say) 6% or $48,000/year for the next 30 years.

Additionally, the biggest fallacy in this plan is the CBO’s estimate that 400,000 distressed borrowers may be able to benefit. I suspect that estimate is off by at least an order of magnitude.

Yes, they are understating the number of distressed borrowers. If this bill gets passed, everyone who bought between 2004 and 2007 in bubble states will want in.

This proposed bailout is DOA. Ain’t happening.

There seems to be a lot of bipartisan support for the bill. It seems likely that they will even defeat the president’s veto. This bill has a very good chance of passing.