If part of the bank's problems is all these credit default swaps...

[mwooldri]

... then why don't everyone get a forced re-mortgage?

I was listening to Thom Hartmann's programme and he mentioned that the banking industry's problem is this credit default swap situation - e.g. there's a $100k mortgage but that's insured by a bank - if it fails they have pay, but someone insured the insurance, and someone insured the insurance that insured the insurance... so if one $100k mortgage goes then apparently some banks are on the hook for millions of dollars... apparently.

Mr. Hartmann's solution was that there should be a federal agency who should buy out the mortgages of the ones about to go into foreclosure and they then collect on the payments.

My question therefore is why should it be a fed agency? Why can't we have all banks do a merry go around, buy each others mortgages (without credit default swaps betting on them), the original credit default swaps then "go away" because the underlying mortgages have all been paid off... and that's it?

Am I being too simplistic here?

[dipsydoodle]

1. I think you might find

that if foreclosed then all of those insurances will have to be actually paid ! May not be enough money on the planet to satisfy that.

[napoleon_in_rags]

2. 'why should it be a fed agency? ' That's sort of the big question with all of this to me.

nt

[hobbit709]

3. What gets me about those "swaps"

Is why are there basically multiple insurance policies on each mortgage? Try insuring your house with 5 different policies and see how many of them actually pay off. These "investment" outfits hedged their bets every which way from Sunday and now they expect each bet to pay off and if they don't, then they expect the taxpayers to cover their bet. They bet every combination of win, lose or draw and now they want to be paid on the losing tickets too.

[izzie]

4. We are lucky 'Joe' is not on this morning.

Once more we would have to hear about all those people who bought 90,000 homes made this mess..Makes one love these large banks, trust, insurance corp. when you know tent cities are growing and people are put out of their homes so they can be sold on the court house steps to some big corp. for pennies on a dollar. What a great system. And to think Congress help them do it. Bankers will police them self you know. Crazy stuff going on in this world. :sarcasm: :sarcasm: :sarcasm: