Sure looks like a desperation move. Lowering the cost to banks to buy more garbage means more garbage!!!! So, now the banks can get a discount on buying back bad loans.
I sell you a loan at 5%, you can't pay me back at 6%..But , now I can ( because of default)
purchase your old loan at 4.5%. Problem---who wants to buy the old loan at 6% that I purchsed at
4.5%?
Fed Panics
Started by
mcleert
, Aug 17 2007 09:21 PM
1 reply to this topic
#1
Posted 17 August 2007 - 09:21 PM
#2
Posted 18 August 2007 - 08:37 AM
Sure looks like a desperation move. Lowering the cost to banks to buy more garbage means more garbage!!!! So, now the banks can get a discount on buying back bad loans.
I sell you a loan at 5%, you can't pay me back at 6%..But , now I can ( because of default)
purchase your old loan at 4.5%. Problem---who wants to buy the old loan at 6% that I purchsed at
4.5%?
Could you please explain the significance of the discount rate? Who uses it? How it is used? The news
said is largely symbolic.