Shifting Risk to Fed

We have been writing about FHA and Countrywide for a longtime. We have wrote about how FHA loans to Countrywide were dangerous and it was shifting risk from Countrywide to Tax Payers.

 

Now, they are trying to do it in the open.  Credit Suisse is floating a plan to shift bad loans from it's book to the federal government (and to you the tax payers). 

 

The risk: If delinquent borrowers default on their refinanced loans, the federal government would have to absorb the loss.

 

Nice deal.  We make the loan.  We make the money from the loan.  But when the loan is bad, pass it onto the tax payers. 

 

Another plan gathering support seeks to make it easier for banks to write off part of the unpaid balance on loans that exceed a property's value, people familiar with the matter said. If that happens, homeowners would owe less, and they might be able to refinance their loans and avoid foreclosure.

 

I don't care about this plan as long as TAX PAYERS are not the once left to foot the bill! 

 

The Credit Suisse plan would open the way for nearly 600,000 subprime borrowers, many of whom are delinquent on their mortgages, to refinance into loans backed by the FHA. Some 1.3 million borrowers were either seriously delinquent or in foreclosure at the end of the third quarter, the most recent numbers available from the Mortgage Bankers Association.

 

If things are so bad, why are they paying dividend on their stocks?  In a way, the federal government would be the one paying the dividend.  We need to stop this crap and hold people responsible.  Let the stock price and dividends of the banks go down to zero before we help them take their bad debt.

 

It's sad to see America become United Stated of Bailouts!