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ORIGINAL: DarkSteven

1. Use eminent domain.  If a house is vacant more than 90 days, the local government seizes it and sells it at auction.  Someone gets a house, the bank gets what the house is worth, and the damn thing is off the books.  The local government then pays the bank the entire bid minus auction costs.

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I believe that Buffet and Mort  R. (cannot think of his name) believe that they are nimble enough on their toes to convert the preferred stock to common stock in the event of problems

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Typically preferred stock comes with restrictions preventing that (and a few other things)

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ORIGINAL: Musicmystery


When Mort R. discussed the preferred stock on the McLaughlin Report the essence of this preferred stock was its convertable nature.  Apparently Mort R.  was asked by Goldman whether he wanted a second level offering.  Mort R said he did not want any of the second offering but was interested in buying on the same level as Buffet.  Apparently Buffet locked in the convertable nature of the preferred stock and probably had other draconian terms attached.  Mort R. seemed to feel that Buffet's investment at that interest rate and safety was a good investment for him also especially since he has about $3 billion in cash and metals on hand.  Taxpayers should be secured should the money be loaned.  Just copy the paperwork generated by Buffet's attorneys.

(in reply to Musicmystery)

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ORIGINAL: TNstepsout

A seizure of these properties under imminent domain will not help homeowners stay in their homes or refinance them and would create more red tape and lengthen the time for the homes to sell.  A better plan would be for the government to buy the loans at a discounted rate directly from the banks which would inject immediate cash to the bank. Then the government could sit on the loan for a period of time, allowing the homeowners time to refinance or sell the home. With cash now injected into the banking system there would be more money to loan and these people could get out from under their adjustable rate mortgages. The government would make back their money when the home is refinanced or sold.

I don't knowhow the banks can value their derivatives until the bad loans are separated from the good ones. The problem all along has been that the lending institutions have been valuing their own goods. How would anyone know if they are right or not? Isn't that part of what caused the problem in the first place? A better solution would be for the gov to purchase the bad loans (as above) thus insuring that the remaining loans (good ones) could be valued properly. That would inject some confidence back into the market and these companies could once again SELL their derivatives and generate some cash. (with added regulation of course)

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A seizure of these properties under imminent domain will not help homeowners stay in their homes or refinance them and would create more red tape and lengthen the time for the homes to sell. A better plan would be for the government to buy the loans at a discounted rate directly from the banks which would inject immediate cash to the bank. Then the government could sit on the loan for a period of time, allowing the homeowners time to refinance or sell the home. With cash now injected into the banking system there would be more money to loan and these people could get out from under their adjustable rate mortgages. The government would make back their money when the home is refinanced or sold.

I don't knowhow the banks can value their derivatives until the bad loans are separated from the good ones. The problem all along has been that the lending institutions have been valuing their own goods. How would anyone know if they are right or not? Isn't that part of what caused the problem in the first place? A better solution would be for the gov to purchase the bad loans (as above) thus insuring that the remaining loans (good ones) could be valued properly. That would inject some confidence back into the market and these companies could once again SELL their derivatives and generate some cash. (with added regulation of course)

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ORIGINAL: TNstepsout

Why deal with the derivatives?  If we are going to give Wall Street money why not take convertible debentures or convertible preferred or even common stock in return for the taxpayers money.  Then you have the assets of entire companies to secure your money.  Then, since we are not spending millions trying to unravel the derivative issue, you can help the home owners. Since Wall Street has the money shouldn't they be happy.  My problem is that they are trying to have the taxpayers take the possibly worthless derivatives at more than market value without recourse.  I would rather loan Wall Street the money with the power to take their companies away from them if they screw up again.  If they default we could house the homeless in the various Wall Street Exchanges and other offices.

(in reply to TNstepsout)

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does anyone know what this type plan would cost the taxpayer?

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ORIGINAL: bestbabync

Every person I have asked just says "Only God Knows and He ain't talking". The politicians talk about $700 billion but I have seen cynics say "add a trillion."  And, we felt Iraq was expensive.

(in reply to bestbabync)