"Vigorous" Action!

It looks as though FED Chairman Ben Bernanke is finally grasping what is going on in the mortgage market. His recent comments show that he finally is realizing how severe the problem is and that these foreclosures are very hard to stop! We have these new programs in place to help curtail the problem, but they are not enough. Bernanke finally stated in a speech that all banks just need to suck it up and realize these losses are not going away! They are not going to be paid back and they need to just take the losses on their books and move forward! I think this is a great statement! These banks were so spoiled with the amount of money they were making that they just expect for things to work out so they are re-paid their money or are bailed out! It sure doesn't look like this will be the case. Bernanke stated the need to take "vigorous" action in figuring out what to do to resolve the problem. At the very core, reducing the principal homeowners owe and re-amortizing their loans to fixed rates sounds like the plan. The problem is that these loans have been packaged and sold to investors. These investors must all agree to such a plan and this is the tough part! In Bernanke's words, " the brilliant minds who cooked up the complicated financial instruments that got us into this problem can also figure a way to get us out"! I truly hope he is right and there is a solution out there!

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