Eating principal reductions means that the taxpayers would by paying down the loan to some lower amount, right? So it’s a bailout for the loanholder (banks, etc), right? What else could “eat principal reductions” mean?
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I suspect this will largely be with Fannie/Freddie and related loans because the process will be simpler than with institutions over which we have less control (that is, the banks). We are the loan holders here as we own these pigs (Fannie/Freddie) now. So we can make a principal reduction or just have the folks not pay us. It’s six of one, half dozen of the other. Frankly, I’d rather reduce principal on loans that we’d otherwise not get paid on anyway instead of foreclose. At least this helps an individual directly as opposed to an institution. Again, you want to see the whole system collapse, which is your prerogative, but casting that option aside, and assuming that certain folks and/or entities will be helped, I assume you’d rather see an individual helped directly as opposed to an institution, yes?
Anyhow, I’m off to a board meeting… at a bank… where we zero non-performing assets, zero loan losses, and boatloads of capital. I know, it’s amazing, but there are lots of banks out there like us. But you won’t read about us/them in the news.
