by Tanta on 8/31/2007 06:57:00 AM
Friday, August 31, 2007
There's nothing like reading the New York Times' version of an anonymous White House official's version of what Bush is going to say but has not yet said about subprime lending at 6:00 a.m. to really start your day off. Oh, look, there's a white rabbit!
Seriously. Get this:
Administration officials, who asked not to be identified, briefed a handful of news organizations on the proposals to be announced by Mr. Bush at an appearance in the White House Rose Garden on Friday morning.White House flunkies require anonymity to discuss Bush's "announcement on housing"? There could be, like, reprisals if they used their names? They're like, what, bloggers?
The main objective of the package, one senior official said, is not to affect the stock markets but to help low-income homeowners, many of them concentrated in certain neighborhoods in several distressed areas of the country, such as Ohio and Michigan.
“The primary focus is to help individuals who have an opportunity to stay in their homes to stay in their homes,” this official said. “The subprime mortgage situation is having a crushing effect on a lot of communities right now.”
Despite the assertion that affecting the markets is not the goal, one administration official said Thursday evening that concern about Wall Street’s reaction did affect the timing of the briefing. He said there was a fear that if the White House announced in the morning that Mr. Bush would be making an announcement on housing, there could be confusion as buyers and sellers of mortgage securities guessed what the announcement would be.
But secondarily, this official said, helping homeowners keep their homes and refinance or renegotiate the terms of the mortgages could have a stabilizing effect on the financial institutions that have these mortgages in their portfolios, and help them write down the value of the mortgages or sell them off at a loss.
“You can’t solve the problems in the financial markets unless you can make some progress on the retail end of it,” said this official. “This is also a step to get banks to start loaning again.”
It's better for the markets if a muddled version goes out Thursday night than if we just get the actual version during trading hours? Is this really what these people think the "efficient markets" theory means? Are we all really confident that the MBS market won't still be forced to "guess" what this means after the announcement?
And what if this version isn't, actually, muddled? What if Bush really is going to propose a mechanism for lenders to refinance loans that can be sold at a loss? And what if that "stabilizes" things because heretofore banks with lending portfolios have been unable to make refinance loans at a loss, but once the President tells them they can, they'll lend more? This could, like, totally revolutionize Econ 101.
Fortunately, I've already got my diploma, and they can't make me take Econ 101 again. I think I will just wait for the, uh, official announcement before attempting to post anything more on the subject. I wouldn't want to move the MBS market in the wrong direction or anything.