Im going to go out on a limb here, but AG probably isn’t reading this site. I know brand me as a heretic but please don’t hold your breath for him to answer, allow me to do so as his proxy.
I, AG, am a banker. As such I do and say things which are good for banks. Many people feel that what is good for the banks is good for America as a whole and while in a macro sense that may be so, I cannot garuantee that on an individual level it pans out that way.
As to why I recommended that Americans might benefit from ARM mortgages let me say with a mimimum of obfuscation that from my point of view they are less risky. From my perspective when my or any other bank lends out money it is gambling that the opportunity cost of doing so is not so high as to make the loan a bad investment. With ARM loans that is less possible because the interest rate tends to adjust to keep pace with current lending rates.
What I would like to tell borrowers is that those fixed rate mortgages really represent insurance, a very expensive form of insurance against rising rates. If I’m wrong, well my house is paid for.
I like to sweep over the minor details, such as financing long term obligations with short term financing tends to transfer risk from the lender to the borrower. After all I am a banker and I do and say what is good for banks.
