"Don't come whining to us with your problems" could be the summary of both President Bush's declaration Friday afternoon basically repeating the commentary of Federal Reserve Chairman Ben Bernanke earlier in the day. This is not to say that sympathy cannot be found for those home owners caught in the squeeze of rising interest rates and lower home values. However, people who entered the housing market late speculating on continued rising prices hoping for quick flips will be left without a chair because the music has stopped playing. All except the funeral march perhaps.
Big Ben said "It is not the responsibility of the Federal Reserve-nor would it be appropriate- to protect lenders and investors from the consequences of their financial decisions."
Bush while equally firm did play the politician because while he is opposed to bailing out speculators you will find in this story President Bush plans to bail out subprime mortgage holders, Jonathan Berr noted With his popularity at an all time low and the very real prospect of the Democrats taking back control of the White House in 2008, President Bush is throwing a lifeline to subprime mortgage holders who are in danger of losing their homes to foreclosure. The plan would allow homeowners who are 90 days behind in their mortgages to refinance their debt through loans insured by the Federal Housing Administration, a move that will help about 80,000 households. Homeowners also would be able to avoid taxes on forgiven debt under a temporary change Bush is proposing. The President also will call for Congress to raise FHA loan limits to $417,000 in some expensive markets.
Both Dubya and Ben were reassuring that they will make every effort to maintain stable markets, liquidity in the banking system, support for depositors and perhaps help certain homeowners get a little time for work outs, and as is the case very often the needed counseling in how to do bank workouts.
For the most part these speeches seem to reflect broad popular support if our bloggingstocks.com site is any indication, based on comments I received during the week to several posts. People do not want to bail out speculators, Wall Street investment banks, sub-prime mortgage brokers, hedge funds, foreign investors and the like. If market reaction was any indication then all was good because most market indices closed up for the day and the week.
Read Chasing Value or Serious Money to find potential opportunities, and to verify my track record, as well.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He is on the advisory board of Internet start-up CircleBuilder.com.
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