From CNN Money:
Mark Zandi, chief economist for Moody's Economy.com, suggested a plan similar to(Sen. Chris) Dodd's in early December (on Subprime Bailout), and agrees that it's a big and very complicated step.
"But we have to prepare for the possibility that something like this will be necessary," he said. And he contended that any bailout must be made with taxpayer money. "It has to have the triple A credit of the United States backing it," he said.
"But we have to prepare for the possibility that something like this will be necessary," he said.
And he contended that any bailout must be made with taxpayer money. "It has to have the triple A credit of the United States backing it," he said.
The biggest problem facing housing, according to Zandi, is that the market is frozen, because investors who buy mortgage-backed securities have abandoned that market. That's created a liquidity squeeze which has made it difficult for even well-qualified borrowers to obtain a loan.
Zandi thinks the fund should buy existing mortage-backed securities in an auction-type process, which would immediately establish what those securities are really worth.
"As soon as there's a price [for the securities], there's a market," Zandi said. "Everyone can then start appropriately valuing what's on their books."