[koraz]

The free market is the best determinant of fair price. List them on eBay.
************

Free market theory doesn’t work in a distressed environment. Consider you own a house in a development of 100 houses each valued at $100,000. 20 of your neighbors need to sell at distressed prices of say $50,000. Is your house now worth $100,000 or $50,000? Now let’s say that those 20 forced sales cause another 40 to sell at $30,000. What is your home worth now? This is a panic situation. IMO, if you are not forced to sell, the value of your home will return to a more reasonable price (maybe not $100,000 but surely more than $50,000). The market needs to be calmed before prices can return to a more appropriate market value.

[rightwingcrazy]

“The market needs to be calmed before prices can return to a more appropriate market value.”

I’m not sure what your definition of propriety is. The most anyone is willing to pay for something at any given time could be considered the fair market value. It might make sense to make sure that amount doesn’t swing too radically over time. It’s not self-evident to me that a massive infusion of thousands of dollars from every man, woman, child and infant in America passes a cost/benefit test. It certainly bears some careful scrutiny by people acting in our interest.

[rightwingcrazy]

“The market needs to be calmed before prices can return to a more appropriate market value.”

I’m not sure what your definition of propriety is. The most anyone is willing to pay for something at any given time could be considered the fair market value. It might make sense to make sure that amount doesn’t swing too radically over time. It’s not self-evident to me that a massive infusion of thousands of dollars from every man, woman, child and infant in America passes a cost/benefit test. It certainly bears some careful scrutiny by people acting in our interest.

[kenavi]

Free market theory doesn’t work in a distressed environment.

Either a mortgage is delinquent, or it isn't. If it isn't delinquent, then the gov't can buy them at face value, irrespective of their market value (e.g. a mortgage charging say 5.60 interest would likely be priced below 100c to a dollar, as investors are demanding a higher return). This will provide liquidity to the selling bank, with which it can re-lend to safe risks (at a pretty high interest rate, currently). The bank is still stuck with the delinquent loans, which are its responsibility to collect on. If it can't, and has to recognize loan losses that reduce or eliminate its equity, then the gov't takes over the entire institution and auctions off its assets, just as we did with the Savings & Loans in the 1980s. The execs of the failed institution get nothing, a "golden parachute" doesn't cover you when your employer is bankrupt.

The deep problem with the bailout is it will nationalize our banking system, all of banking will become like Fannie Mae and Freddie Mac. Our dollars will wither to nothing.