Posts Tagged ‘Elizabeth Warren’

Five words from Warren

…And of course Elizabeth Warren lays out the bottom line better than anyone. Five words: Good regulations support product innovation.

Wednesday, July 22nd, 2009 | Tags: ,
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Reform on the horizon

Today in The Washington Post, Treasury Secretary Timothy Geithner and National Economic Council director Larry Summers preview their proposed new regulatory regime for the financial industry. The big news on the mortgage front: They vow to require future securitizers of mortgage and other debt to maintain a financial interest in any any instrument they package and/or sell. That measure is evidently intended to restrain them from reckless underwriting – they’ll now have to live with the consequences of excessive risk-taking.

But will they? Mortgage lenders and those who finance them have proven ingenious at offloading risk onto borrowers, through prepayment penalties, fees and so forth, which remain legal within certain bounds and proved toxic to subprime borrowers. Geithner/Summers commit to a financial product safety commission, per Elizabeth Warren’s exhortations, but in a sense they are allowing the toaster factory to keep churning out incendiary devices. I’ll be very surprised if their reform plans actually do anything to rein the practice of offloading risk onto borrowers – and as long as borrowers continue to shoulder the high price, having skin in the game won’t stop securitizers from underwriting destructo-loans.

Monday, June 15th, 2009 | Tags: , , , ,
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Geithner: No one knows if mods will work

From this morning’s Congressional Oversight Panel hearing with Timothy Geithner: The Treasury secretary admits, more forcefully than I’ve yet heard him, that the administration has no idea of whether its mortgage loan modification program will actually work:

It’s going to take a little time to judge what’s actually happening…. We’ll have to wait to see the pattern of modifications and the extent to which they allow economically viable homeowners stay in their homes.

It’s a very complicated program as you know, and a complicated set of incentives we’re trying to o change. What we have is both a problem and opportunity…as we see problems in design or challenges in implementation we’ll try to fix those.

That’s a fair and honest assessment from Geithner — quite a contrast to his dissembling on any direct questioning (primarily from Warren and commission member/AFL-CIO counsel Damon Silvers) about public risk, accountability, and expected outcomes on the bank capital infusions.

Tuesday, April 21st, 2009 | Tags: , , , ,
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