Post by unlawflcombatnt on Aug 10, 2007 15:29:17 GMT -6
Subprime Bail-Out???
Below are excerpts from a Yahoo News article discussing the Fed's "injection" of liquidity into the market, and how it's affecting multiple elements of the economy, especially housing and subprime mortgages.
By TIM PARADIS, AP Business Writer
8/10/07 5 P.M, EDT
"The Fed added $19 billion in liquidity to the market Friday morning, then another $16 billion and, finally, $3 billion....
The New York Fed, which carries out the central bank's market operation, announced a three-day repurchase agreement of mortgage backed securities and then two more of the so-called "repo" moves to inject liquidity into the market. The Fed's maneuvers came after the fed funds rate, the amount banks charge each other for overnight loans, ticked above 6 percent again Friday — well above the Fed's target of 5.25 percent and a sign that credit was becoming harder to obtain....
The Fed stepped in after the same occurrence Thursday, injecting $24 billion in temporary reserves to the U.S. banking system....
In a repo, the Fed arranges to buy securities from dealers, who then deposit the money the Fed has paid them into commercial banks....
Part of the unease over subprime loans — those made to borrowers with weak credit — relates to a process known as securitization. Investors bundle together mortgages, including some subprime loans, and sell them off to institutional investors such as hedge funds and mutual funds. These buyers are hoping for the steady flow of income from homeowners making their mortgage payments. The result is that many big investors are finding it difficult to sift through their holdings and take stock of all potential subprime loans that could go bad....
Such loans sour when borrowers with poor credit find themselves unable to make their mortgage payments now that home values aren't rising as fast or even falling in much of the country...."
I have a question for anyone who can answer it.
Is ALL of this "injection" going toward Fed purchase of Mortgage Backed Securities??
If so, it's damn-near a direct bail-out of the Housing Racket and the con-artists who created it. To the tune of $62 billion in 2 days.
Talk about "moral hazard."
More like "im-moral hazard".
Below are excerpts from a Yahoo News article discussing the Fed's "injection" of liquidity into the market, and how it's affecting multiple elements of the economy, especially housing and subprime mortgages.
By TIM PARADIS, AP Business Writer
8/10/07 5 P.M, EDT
"The Fed added $19 billion in liquidity to the market Friday morning, then another $16 billion and, finally, $3 billion....
The New York Fed, which carries out the central bank's market operation, announced a three-day repurchase agreement of mortgage backed securities and then two more of the so-called "repo" moves to inject liquidity into the market. The Fed's maneuvers came after the fed funds rate, the amount banks charge each other for overnight loans, ticked above 6 percent again Friday — well above the Fed's target of 5.25 percent and a sign that credit was becoming harder to obtain....
The Fed stepped in after the same occurrence Thursday, injecting $24 billion in temporary reserves to the U.S. banking system....
In a repo, the Fed arranges to buy securities from dealers, who then deposit the money the Fed has paid them into commercial banks....
Part of the unease over subprime loans — those made to borrowers with weak credit — relates to a process known as securitization. Investors bundle together mortgages, including some subprime loans, and sell them off to institutional investors such as hedge funds and mutual funds. These buyers are hoping for the steady flow of income from homeowners making their mortgage payments. The result is that many big investors are finding it difficult to sift through their holdings and take stock of all potential subprime loans that could go bad....
Such loans sour when borrowers with poor credit find themselves unable to make their mortgage payments now that home values aren't rising as fast or even falling in much of the country...."
I have a question for anyone who can answer it.
Is ALL of this "injection" going toward Fed purchase of Mortgage Backed Securities??
If so, it's damn-near a direct bail-out of the Housing Racket and the con-artists who created it. To the tune of $62 billion in 2 days.
Talk about "moral hazard."
More like "im-moral hazard".