alt.politics.economics

alexy wrote:

>"John Galt" wrote:
>
>>
>>"alexy" wrote in message
>>news:v4s1c35fkgeqbplsn0eqp9v50ncarmmstf@ ...
>>> "John Galt" wrote:
>>>
>>>
>>>>Further, the mortgage backed bonds it took back aren't worthless.
>>
>>> I haven't seen anything about that. All I have seen is stories about
>>> the Fed increasing the money supply ("Injecting liquidity"). Have you
>>> seen somewhere that they are taking the subprime mortgage funds as
>>> collateral? I haven't seen anything to that effect. If they are, this
>>> smell more like a Chrysler bailout than a macromanagement of the
>>> economy.
>>
>> /news/ ?type=bondsNews&storyID=
>>
>>JG
>Thanks for the info. That smells.

Actually, the article Charles cited,
/stories/2007/08/12/politics/animal/
sheds more light on what they did. The term "mortgage-backed
securities" has apparently gotten everyone (me included) jumping to
the conclusion that they were buying back these subprime mortgage
funds, which IMHO would be providing corporate welfare to those who
took that risk and lost. In fact, it sounds like the mortgage backed
securities they accepted as collateral are all conforming loans, not
sub-prime, jumbo, limited documentation, non-owner occupied, etc.
loans. As the article Charles cites points out, offering of the same
interest rate on all three types of collateral may offer some subsidy
for this segment of the debt market, but it's not like the Fed bought
Bear Stearns' subprime mortgage backed debt.
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