If Barney Frank and Richard Shelby did not like Bernanke, an unelected man making decisions to lend $85bln (to AIG) then what can we think of a plan by Senator Charles Schumer that will let every bankruptcy judge in the country decide how to reset the price on a home at bankruptcy proceedings?
Earth to Chuck, earth to chuck? Can you read me Chuck?
The more we meddle in the micro economics of this crisis the more we run the risk of muddling the entire economy. For now the economy is functioning with a financial sector that is in some trouble. But start to dig inside and reset the rules and who knows how badly you can affect how the economy works. Are you really going to keep people in their homes based on a price set by a bankruptcy court judge? What about all the people who to this time have been foreclosed? They are tax payers too - do they get recourse?
I still think the way you solve this is to try and stabilize banks by changing the way you make firms market securities to market. Schumer's plan is too intrusive.
The less that government decides (or makes the court decide under re-written rules in mid game) the better.
Sure banks made bad mortgage lending decisions. So did the people who took up those mortgages. Why favor one over the other? and why did so deeply into capitalism. Don't you know that destroys it?