Posted on 03/24/2008 1:04:54 PM PDT by Brilliant
Appearing Friday night on Bloomberg’s “Political Capital” television program, former Treasury Secretary Robert Rubin called for quick action to address surging home foreclosures, and suggested that policy makers should consider using taxpayer money as part of a solution.
Mr. Rubin was supportive of actions already taken by both the Federal Reserve and the Treasury Department. But he told Bloomberg journalist Al Hunt that “the place that hasn’t been addressed – well, the issue that hasn’t been addressed, are all of these mortgages that are in trouble, the mortgages that are facing foreclosure.”
Mr. Rubin said the Federal Housing Administration would probably be needed to play some sort of role in addressing the foreclosure situation...
“I think – it clearly has undesirable side effects; it has moral-hazard effects; it has bailout effects. On the other hand, I at least think that while we could get through this without substantial additional trouble, the risks are high enough or great enough where I think it should be very, very seriously considered.”
Mr. Hunt asked whether — following the Bear Stearns debacle — the worst of the credit crisis has passed. Might we see more financial institutions fail?
“I don’t know the answer to that, Al, and neither does anybody else. I think there’s also a very real possibility that a lot of trouble could lie ahead. And at least my view, since we’re in uncharted waters, and I don’t think there’s a way to make a probabilistic judgment about where you are in that spectrum, I think we need to take these risks very seriously and I think that we should – from a policy perspective – take whatever measures we can find that we think are sensible to try to reduce that risk,” Mr. Rubin said...
(Excerpt) Read more at blogs.wsj.com ...
Another Klintoon rat swims to the surface for a word or two.
These people are like methheads or crackheads, except they're taxheads. Even when not in power, they're looking and begging for their next fix.
You know, we have to let things settle out, show some tough love to people and businesses. If my company makes a mistake on pricing or variable costs (run a trucking business), there is no one there to bail us out. We have to make changes to survive.
By the way - why can’t all of these people with ARMs that are so high just refi to a 30 year fixed at 5.25%? Or are these the folks that got 110% loans and now can’t refi because they owe more than the house is worth? In that case, foreclosure is the only real option. The house will then be sold by the bank, the former owners will have to find a place to rent and rebuild their credit. Both take a hit, but the lower cost of housing and cheap mortgage rates will then cause the housing industry to rebound.
Rubin helped create this mess when he was a Clinton pimp.
Two words, “moral hazard.”
Government causes more disequilibrium (swings, instability) than it sets out to fix.
Clintonian economy “genius” want the taxpayers to bail his company out for his own stupid decisions. Of course.
"We're not about to go into a situation where (real estate) prices will go down. There is no evidence home prices are going to collapse."~~Alan Greenspan, May 21, 2006
“The damage from the subprime market has been largely contained. Fortunately, the financial system and the economy are strong enough to weather this storm.”~~Richard Fisher, Federal Reserve Bank of Dallas President, Apr 4, 2007
"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."~~Fed Chairman Ben Bernanke, May 17, 2007
"There is absolutely no truth to the rumors of liquidity problems that circulated today in the market. Bear Stearns' balance sheet, liquidity and capital remain strong."~~Alan Schwartz, Bear Stearns CEO, March 10, 2008
Rubine forgot to add that if Hillary gets elected all the financal sector woes will disappear and the economy will be strong like in the 90s.
Mr. Rubin’s company shouldn’t have giving away money to people under stupid circumstances.
If anyone should have risk managers and financial analysts on staff, it’s Citibank.
Wah ! I can’t pay my credit cards ! Wah ! I might lose the use of my credit cards and now how will I prop up the economy if I can’t shop ! Wah ! I want a bailout too ! How come it’s only homeowners who are getting bailed out ! Wah !
/typical irresponsible whine
Everybody seems to be citing “high” repo rates and when I went looking for hard numbers on current repo’s I could not find any... The newest stats/numbers I could find on line were from last year.
Anyone have a better source?
You have spelled this situation out clearly and concisely. Any intervention that keeps this correction from occurring, will only prolong and complicate the problem.
No one wants to see people lose their home, but if they can’t afford it, they can’t afford it. The only way to negate this fact is to let Uncle Sam pay for it, which means you and i pay for it.
No lessons learned for the lender or the buyer. Just like in the body, markets have pain sensors. Just like feeling pain is generally a good thing for the body, it is also for a market. If no pain is felt here, we will just keep putting our hand on the burner and getting burned. The government should only intervene when it is obvious no action will start a massive downward spiral, much like the deal with Jp Morgan and Bear.
It’s real easy for RR to call for a Federal bailout of this mess when he helped create it in the first place. I don’t know what the answer is, but I do know that the taxpayers don’t have enough money to bail this one out...
You can bet that Rubin doesn’t give a whit about the people involved in these foreclosures. Its all about his Wall Street buddies and the trouble they’ve gotten into with their fancy credit instruments (like derivatives). They’ve goobered things up so badly that no one knows what anything is worth anymore. Only by putting up public money as a crutch will anyone have enought trust in the system to consider those derivatives worth anything.
Of course, the US is bankrupt anyway, but hey, so many people lend us $$ that the racket is good for a few more years. Right?
Speaking of Citi... I've owned the stock for 8+ years... it sure is nice to see my long-term investment drop by over half its value in a year.
Mr. Rubin... can I call you Robert...? Are not you still with Citi? You are. Well go find yourself a mirror - and wipe the rotten egg off your face you piece of garbage wrapped in a $3,000 custom made suit.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.