Greenspan Speaks Out on U.S. Economy
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- MortgageLoan.com | May 27, 2008
Former Federal Reserve chairman, Alan Greenspan has echoed the sentiments of Warren Buffet, by saying the United States was still more likely than not to have a recession despite relative stabilization in the economy in recent weeks.
"I still believe there is a greater than 50 percent probability of recession although that probability has receded a little and I think the probability of a severe recession has come down markedly," the former chairman told the Financial Times.
He did point out that it was "too soon to tell" whether the worst of the financial crisis was over as this would depend on what happened to house prices.
Mr. Greenspan estimates that house prices will fall by another 10 percent from their February levels for a total peak-to-trough decline of roughly 25 per cent.
"If the economy was weak and the market overshot, house prices could decline by another 5 percent, "he said.
"Such house price declines imply a major contraction in the level of equity in owner-occupied homes, the ultimate collateral for mortgage backed securities," Greenspan added. Mr. Greenspan said it was still not clear whether big financial institutions had taken all the writedowns they would need to take on higher rated tranches of mortgage backed credit products.
Greenspan said he believed there was a "tug of war" taking place in the economy, with financial sector stress pulling one way and strong corporate liquidity pulling the other. Corporate liquidity is being eroded, but only gradually.
"No one knows how this tug of war will end - specifically, whether the financial crisis will end before it drags down the real economy."
Greenspan sees the main risks to this being the household savings rate moving up more rapidly than most analysts expect as home equity falls, the labor market weakens and access to credit declines.
Bankruptcy Reform Back on the Table
- By:
- Bill Rice - MortgageLoan.com | November 21, 2008
One of the earliest ideas for helping homeowners facing mounting mortgage debt and potential foreclosure on their home was to reform bankruptcy laws. The concept is now officially back on the table, introduced into the Congressional lame-duck session by Senator Richard Durbin (D-IL).
TARP is Closed for Relief Until Further Notice
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- Bill Rice - MortgageLoan.com | November 20, 2008
Remember what a crisis the $700 billion mortgage market bailout was--the very existence of the American financial order hung in the balance.
Fixing the Housing Market, Lots of Ideas...Any Answers?
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- Bill Rice - MortgageLoan.com | November 19, 2008
Almost a year into the dawning of the housing crisis (many chronologist are setting that around the January 2008 crumbling of Countrywide) ideas continue to flow, but few seem to be the answer. In fact, this seems to be the growing consensus--there is no silver bullet.
G-20 Lots of Motion, Will There Be Action?
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- Bill Rice - MortgageLoan.com | November 18, 2008
The 20 most powerful industrial nations, and now the caretakers of an unprecedented global financial crisis, assembled in Washington DC over the weekend. Their mandate was broad and daunting--stabilize world markets.
FDIC Challenges Treasury with New Loan Modification Proposal
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- Bill Rice - MortgageLoan.com | November 17, 2008
On the heels of the Treasury and Federal Housing Finance Agency's (FHFA) loan modification plan for Fannie Mae and Freddie Mac, the FDIC releases their own proposal. In this unprecedented, unilateral, and aggressive move by a Federal agency the FDIC is essential fighting a very public political battle directly with the Treasury and the current Administration.
Mortgage Rates Drop for Second Straight Week
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- Bill Rice - MortgageLoan.com | November 14, 2008
Another week of dismal economic data have again pushed down mortgage rates. Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 6.14 percent, down from 6.20 percent last week. This demonstrates a steep decline from 6.46 percent two weeks prior.
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