GOP Primary Megathread!

[Admiral Yi]

Joan: While you're at it, please explain how forgiving principal improves the collateral quality (i.e. raises the price) on that particular house.

[Ideologue]

Loan forgiveness can be a reasonable alternative to either a crippling debt load, or foreclosure.

MORAL HAZARD!

[The Minsky Moment]

I thought you said she was talking about making pack downs part of the bankruptcy law.  That by definition is pretty enduring.

No the only thing I could recall is that a few years back she resisted proposed creditor friendly amendments to the bankruptcy laws that were being pushed by the credit card industry.

Joan: While you're at it, please explain how forgiving principal improves the collateral quality (i.e. raises the price) on that particular house.

Seems like DGuller already gave most of that answer.  First it avoids foreclosures, which when concentrated are crippling for housing prices.  Second, by pulling the equity above water, it frees up the possibility for transactions and gives the home owners proper incentives to maintain the property.  All of which is good for housing prices.

[Neil]

So the plan is to reinflate the housing bubble?

[DGuller]

So the plan is to reinflate the housing bubble?

How does this reinflate the bubble? 

[Viking]

So the plan is to reinflate the housing bubble?

How does this reinflate the bubble? 

Thats tricky, the nips tries effectively negative interest rates, that didn't work.

[DGuller]

So the plan is to reinflate the housing bubble?

How does this reinflate the bubble? 

Thats tricky, the nips tries effectively negative interest rates, that didn't work.

If I were you, I'd rush to the nearest hospital with a dedicated stroke unit.

[fhdz]

 

[Admiral Yi]

No the only thing I could recall is that a few years back she resisted proposed creditor friendly amendments to the bankruptcy laws that were being pushed by the credit card industry.

You yourself a page back or so said she advocates loan foregiveness as part of bankruptcy.  Am I missing some key point here?

[Ideologue]

Most bankruptcies do involve loan forgiveness, after a fashion.

[The Minsky Moment]

No the only thing I could recall is that a few years back she resisted proposed creditor friendly amendments to the bankruptcy laws that were being pushed by the credit card industry.

You yourself a page back or so said she advocates loan foregiveness as part of bankruptcy.  Am I missing some key point here?

Yes.  Individual bankruptcies in the US amost always involve forgiveness of loans.  that has been so for many years now.

[The Minsky Moment]

So the plan is to reinflate the housing bubble?

The plan is to put a floor on the crash and provide a basis for recovery that would make banks more interested in making a 15-30 year loan commitment.

[Neil]

So the plan is to reinflate the housing bubble?

The plan is to put a floor on the crash and provide a basis for recovery that would make banks more interested in making a 15-30 year loan commitment.

Wouldn't it be better if the mortgaged properties were forgiven enough debt so that they were no longer underwater but to retain the bulk of the loan, or is that what we're talking about here?

[DGuller]

So the plan is to reinflate the housing bubble?

The plan is to put a floor on the crash and provide a basis for recovery that would make banks more interested in making a 15-30 year loan commitment.

Wouldn't it be better if the mortgaged properties were forgiven enough debt so that they were no longer underwater but to retain the bulk of the loan, or is that what we're talking about here?

It's hard to know what Yi is talking about, but that's what I'm thinking of.  I'm thinking of something functionally similar to a short sale to the current owners. 

[The Minsky Moment]

Wouldn't it be better if the mortgaged properties were forgiven enough debt so that they were no longer underwater but to retain the bulk of the loan, or is that what we're talking about here?

I think so.
I don't know whether that is what Warren is proposing or indeed even if she is proposing anything about this at all.  My knowledge of her is that she is a bankruptcy and commercial law expert
who got sucked into some TARP oversight committee.