Maxine Waters channeled her inner Kramer - not Jim Cramer - Cosmo Kramer - when she suggested today that it was possible to have mortgage mods with principle reductions and not have any party incur losses. Just write it off! Mark Haines does a good job talking to her like she's a third grader, but Maxine, as usual, just goes off on a tangent when she gets backed into a corner.
For some reason, I'm having trouble embedding the video, but please click over to CNBC and watch the Maxine Waters video, then watch this classic Seinfeld clip:
-KD
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7 comments:
Well, she is certainly an idiot. But in this case I do not think you are accurately paraphrasing what she said.
In response to Mark Haines's question, where she talked about the banks "not necessarily" having to lose money, she only talked about restructuring loans, converting ARMs to fixed, and extending the maturities.
She clearly knows principal reductions would create a loss, because she only mentioned that before and after responding to Mark's question, not during.
And Burnett's attempt to ask about her husband's bank was just sleazy. Just because Waters is a dangerous fool does not make her fair game for everything.
Nemo: Erin's question was certainly not a softball lob - but it's hard to argue that it's not relevant. Maxine is saying what the banks should be doing - so Erin just asked her if her husband's bank was doing that. Sleazy? maybe - but relevant.
as for the paraphrasing - I was careful not to quote Maxine, as you notice... But she did indeed say that they could "write down the principle". Haines pointed out that writing down principle is losing money, and she changed the subject.
I instantly thought of Kramer. That Seinfeld clip is an all time classic. JUST WRITE IT OFF!
It simply blows my mind how people like this get into important positions ie Congress. I'm really not sure if she is intentionally avoiding the questions/points of Haines or if she really just doesn't understand how modifications work.
I admit the Seinfeld clip is funny.
But "write down" and "write off" are not exactly the same thing.
I cannot believe I am defending Maxine Waters. You know what? Never mind...
This reminded me of something I was thinking about. If you want your principle written down then you forgo a portion of the future value of your property to the mortgage holder, or in other words in return for the write-down you sell an option on any future capital gains to the bank. It would have to span a number of years, say 5 or 10 and be a contractual part of any sale to the next buyer if you sold before the option expired.
So if you bought the house for $100k w/ 10% down but it's worth $70 now, then you get a $30k write down but 50% of cap gains above $70k go to the bank when it's sold in 5 or 10 yr's. Wud be like a leasehold arrangement in the UK. Prob too complicated to be workable and certainly wouldn't work for everyone but it would solve several problems at once, keep inventory off the mkt for one, and keep quants busy for years.
Kid, I can't resist quoting you from a few months ago:
"Maxine Waters from California is completely ignorant (she's not alone in Congress in that regard) and batshit crazy."
Amen.
There's a similar theme happening out there in talk show world about how "the govt" should just lower everybody's interest rate with no fees, etc. and that would give everybody a bunch of money to spend.
As if there's no downside for anybody in this situation (debts are somebody else's asset) and these things can just be done without expending any significant effort or expense.
The ignorance is palpable.
I didn't watch the clip, as I just cannot make myself watch CNBC in general, much less with Maxine Waters as a guest. But it would seem to be a fair question as to whether her husband's bank was making this magnanimous gesture as well. What's good for the goose,...
Of course she probably thinks that the fed govt should pick up the tab and tax all those other wealthy folks to pay for it.
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