NEW! CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Friday, November 30, 2007

Where is Moe?

by Calculated Risk on 11/30/2007 11:24:00 AM

That was my reaction to the Bernanke and Paulson show. I thought there were three stooges!

Seriously, the best take on the Paulson freeze proposal was Tanta's letter: Dear Mr. Paulson.

The industry is telling you right now that they just don't have enough people with the right skills to be able to wade through all the problem (or potential problem) loans fast enough to make the workout/foreclose decision.
Since the industry lacks the infrastructure to handle the work load, it makes sense to have some sort of guideline to decide which loans to foreclose on now, and which loans to foreclose on later. Think of it as a mortgage triage protocol. And helping to craft these guidelines is a reasonable role for government. So kudos to Paulson (even if we have to put up with some silly PR).

The industry group name is hilarious too: "Hope Now Alliance". That reminds me of SEC Director Erik Sirri's comment earlier this week: "Hope is a crappy hedge".

As far as Chairman Bernanke, his concern that the stock market is off 5% or so from the recent high is touching:
The fresh wave of investor concern has contributed in recent weeks to a decline in equity values ...
This comment strikes me as irresponsible given the concern over the "Bernanke Put", speculation and moral hazard. The Fed's asymmetrical response to asset bubbles is an interesting discussion, but concern over a 5% or 10% decline in the stock market? Come on.

Finally, we all know the Fed is going to cut rates in December. While the Fed was talking tough, the market was debating the size of the rate cut. And that makes it seem as if Bernanke is behind the curve.

I'm still looking for Moe.