The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.
This is nonsense. There is a myth that if we get the housing market humming it will help the economy. This plan at best could slow declines and give modest bumps to a few some select markets for a temporary time-frame. This would do NOTHING for economy. What makes this even more absurd is the securities market is dead. There are no buyers for this anymore regardless if they are good loans or not. The business model was kill by the Wall Street grifters, Paulson included.
By Laura Mandaro
Last update: 12:28 p.m. EST Dec. 3, 2008Comments: 43
SAN FRANCISCO (MarketWatch) — Securities industries groups warned Wednesday banks may fail to meet $2 trillion of demand for credit origination over the next three years if securitization markets continue to fail to operate properly. In a statement released alongside a conference of U.S, European and Australian securitization and bond groups, plus major arrangers such as Citigroup (C:7.40, -0.42, -5.4%) and Morgan Stanley (MS:
14.94, +1.09, +7.9%) , the groups recommended ratcheting up standards and information on residential mortgage-backed securities to restore confidence. Mortgage losses and the subsequent spike in default fears on Wall Street have nearly shuttered securitization markets, making it tougher for banks to originate loans that get sold to these pooled securities.
