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Archive for the ‘foreclosures’ Category

To understand more about a  deadly bacteria, a researcher would try to isolate it in the lab, study it, dissect it, sequence its genome, etc.  The folks at NPR who have been covering the financial crisis wanted to learn more about toxic assets, so they took a similar tack. They bought one and have been studying it, dissecting it, and sequencing its genome. Their ongoing work nicely illustrates what a canonical toxic asset is. (They went very toxic, paying $1,000 for a mortgage-backed security of Countrywide mortgages!)

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The Bush administration is working on a plan to help homeowners at risk of default.

This would be the second time this year that legislators intervene to help homeowners; in July, President Bush already signed legislation to help borrowers to refinance at more affordable rates. For an academic analysis of that legislation and the way it impacted taxpayers, homeowners, and the financial industry, see a recent paper by Mian, Sufi and Trebbi. Mian and coauthors argue that special interest campaign contributions from the financial services industry and local constituencies predict Congressional voting patterns when it comes to recent government interventions. (more…)

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