BTW, this is exactly what the Maiden Lane vehicles were intended to do: take the positions off the books to buy time. The claim was: we can't finance these positions "at the market" because the market is skewed. Neither side wanted to budge, so something had to be done.
Housing is in a similar situation: if your mortgage is underwater, your LTV prohibits you from getting a new mortgage with better terms. And: better terms *are* out there, but the people who need them most can't get them. People who don't need it can get all the credit they want at historical low rates. Similarly, the bank doesn't want to take less because they are on the hook.
It's a perfect time for a long-term-vision party to step up and make a loan. And the government is probably the only party able to do such a thing.
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Anyone following this use-the-14th-ammendment-to-raise-the-debt-ceiling meme?
/jordan