This entire situation has been so predictable. There will be a drive to bailout these companies on the guise that this is hurting the end consumer, which it is of course, the problem is they are stuck with their mortgages and are going to have to walk away from their properties. This might as well be millions of cracked slabs as they only thing to do is to walk.
What I’ve been saying for quite some time is that securities industry style regulation, which is very hard core, will be applied to the mortgage and real estate industries. The securities business has been through countless scandals which is why it’s hyper regulated in its current state.
BTW I’m a free market capitalist and I hate regulation and I’d rather have a caveat emptor model on both sides, the borrower side and the buyer of the debt side, however the political process is as predicable as bubble economics so this is going to happen.
The markets were calm this week as a reaction to the Fed Discount Window rate cut. There is very little chance that five years of warped economics are going to be fixed by 50bps. There are more total losers out there that haven’t hit bottom yet; CFC might just be one of them.
