Bond Insurance Companies are losing high credit ratings reportedly because they foolishly signed on to insure or guarantee subprime mortgage loans and other credit creatures they obviously did not understand very well. Taking the teeth from foreclosures will increase market confidence. The credit ratings of Bond Insurance Companies should increase along with the increase in market confidence.
Yet another available alternative to placing or keeping Bond Insurance at risk involves Judges. And Senators and Members of Congress. Lending institutions have failed to modify loan provisions enough to stem the record cascade of home foreclosures, that is an indisputable fact. The subject alternative is therefore to amend the Bankruptcy Law so that Bankruptcy Judges can modify loan provisions enough to stem the record cascade of home foreclosures -- including halting or lowering the adjustable rates of mortgages taken by lenders from borrowers who could not pay those rates.
Lenders reportedly are opposed. They threaten to raise interest rates on new mortgages. This threat may be as empty as a borrower's wallet. The problem is that very, very few people are interested in signing up for new mortgages in the current market. Jonathan Peterson, "Aid on Home Loans Sought" (Los Angeles Times Online, Tuesday, February 26, 2008).
Fanning the flames of the credit inferno is not an option. Turning off the fuel that fuels the credit inferno, by using the best tool or tools at hand to stem the fire, is ultimately the ONLY alternative to Bond Insurance at risk.
Please Read The Disclaimer.
Comments