This "should" be a huge game changer as well. This was the end game we've been discussing for a year now. The government in the end will own the mortgages. (through the morgaged securities)
- Treasury Secretary Henry Paulson is working on setting up a government facility to take on bad debts from financial institutions to prevent a worsening of the global credit crisis, Wall Street sources have told CNBC.
The facility would be similar to the Resolution Trust Corporation, which was set up in the late 1980s to take on all the failed thrift assets during the savings and loan crisis, these sources said. (the difference was those were FDIC insured - whereas these monsters we are dealing with today are creations of greed and we have no obligation to take them over... well other than they have wrecked havoc of epic proportion on the financial system)
Meanwhile, Calpers, the nation's biggest pension fund, said it would no longer lend out Morgan Stanley [MS ]
or Goldman Sachs [GS ] shares to short-sellers, who profit from stock declines, the Wall Street Journal said. Both stocks have been pummeled recently by heavy short-selling. (another wow in a series of wows)
While pathetic and a bailout for all the bad decision makers; the lack of regulation that allowed it to get to this point requires a solution or the whole financial system devolves globally, and I guess this is the best solution of the bunch. We'll trade years of potential obligations (and be sold "hey they made money on it when they did it in the 1990s so why not this time around?) in return for a positive few days in the market. :) Kick the can. Kick the can.
At this point everytime the market moves 1.5% in 10 minutes I just go to CNBC.com and see what the latest breaking news is. Whipsawed again.
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