In a recent series of posts, I argued for the creation of an Individual Mortgage Aftermarket to supplement or replace that in Mortgage-Backed Securities. My main contentions were:
- It’s feasible.
- The alternatives aren’t feasible.
Today, the New York Times has an article on the US government’s proposed alternative. It doesn’t sound promising.
The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.
…
But analysts question whether this approach will be enough to unlock the credit that the economy needs to pull out of a deepening recession. Some worry it may benefit only select investors at taxpayer expense.
