Paulsson would rather see a kind of Govt mortgage credit guarantor. He thinks that Congress should create private entities that would buy up mortgages guaranteed by the Federal Government. The entities would be regulated with a rate setting commission that would also review and approve mortgage products.
If rates were controlled and mortgage products reviewd, we may find the kind of teaser rates that seduced many into taking on too much risk and signing off on predatory mortgages eliminated. That would allow the Capitalist system to function and yet create strong Governmental oversight to keep the industry from ever making such drastic mistakes again.
The FDIC also has a progrqam to buy mortgages which is gaining ground. These kinds of actions can directly lower mortgage rates and other types of consumer debt. In effect, the Fed is stepping up in big way with the explicit goal of driving down these interest rates. If it is prepared to buy enough debt, it can drive these rates down.
I would also like to see the Fed buy up the 10 Treasury bond that so many variables are tied to. This would in effect, allow the Govt to buy its own debt and lower rates in the process.
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