Stated HELOC dischargeable
That said, both the lender and the borrower to placing the same bet. Here, the borrowers lost, and will go bankrupt. Maybe the lender should do the same?
Thoughts on human interaction over the next 25 years
Some of us think that some thing's wrong, and these guys we're drinking with aren't serious enough to fix it. We know that trillions of dollars in presumed housing wealth have disappeared, but we don't know who's ultimately going to bear the loss. Americans know that as a nation, we cannot afford our clothes, furniture, or gas, unless the people who are selling it to us lend us our money back. Economists fret about "imbalance" and "adjustment", but we've yet to see a serious plan, other than let's-keep-this-party-going.Right now there is no ETF that is a perfectly hedged basket of major planetary fiat currencies. That leaves us with GLD
So, we lose faith. When we lost faith in Northern Rock, Bear Stearns, Citigroup, or Lehman, the central bankers stepped into the fray, and stood behind them. So, we ask, who stands behind the central bankers? We take a peek, and all we see is our own money. Which we quickly start exchanging for something else.
Last week, the Fed decided to ask Congress for the right to pay interest on bank reserves. (Hat tip Barry Ritholtz, see also William Polley, Mark Thoma, Brad DeLong) This is a very big deal.I don't share Steve Waldman's optimism that democratic accountability will help the situation at all. We are talking about a highly technical area in the field of financial regulation, which is probably as arcane as it gets from a policy perspective, and. I cannot fathom how inviting The Mob to the table will help anything.
Don't be misled into thinking that the Fed's proposal is just some arcane, technocratic change. The Federal Reserve is asking taxpayers for a big pile of signed, blank checks. That's far too much power to put in the hands of a quasipublic organization with little democratic accountability. This authority should not be granted without some strong strings attached.
[I]f one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.I'm not sure if this is actually true (would you pay more for a stock of Amazon.com if your broker gave you a great deal on your margin account?) but it certainly is how people have behaved. All of the cheaper financing that financial "innovation" created for house prices went directly into the price of those assets, so buyers were no better off before, and all the benefit was captured by previous owners. Similarly, when you hear about new government plans to help the first time homebuyer, all they will do is transfer more money to current homeowners, since the benefit will directly be factored into a new (higher) price. See this in action in my favorite graph below:
1) Better disclosure does not help to prevent financial crises. They were called "subprime"!
2) Prudential controls never work either, certainly not at a system level
3) Risk management does not work, as it ignores "off model" events which end up being the problems.
1) Capital controls should be counter-cyclical. So as the risk premium falls, the capital charge should riseI think this last suggestion is unworkable as we've seen what a good job social security and medicare premiums have done keep future tax increases down. Any premium collected will be, instantly, spent.
2) Forget about "bank" vs "non-bank". Look at maturity mismatch and leverage. The more an organization has of both, the more it should be regulated. A zero leverage, maturity matched lending institution, for example, would probably need zero regulation. Hmmmm.
3) Banks should pay an insurance premium so taxpayers do not get fleeced too much when they bail banks out.
Connecticut Attorney General Richard Blumenthal said in an interview yesterday that he is investigating possible conflicts of interest since Buffett's company owns almost 20 percent of Moody's Corp., parent of the credit ratings service.