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The Wall Street Journal's Damian Paletta is reporting on a lobbying effort by global investment bank Credit Suisse to pass a scheme that would stick taxpayers with hundreds of thousands of failing subprime mortgage loans:
The Credit Suisse plan would open the way for nearly 600,000 subprime borrowers, many of whom are delinquent on their mortgages, to refinance into loans backed by the FHA. Some 1.3 million borrowers were either seriously delinquent or in foreclosure at the end of the third quarter, the most recent numbers available from the Mortgage Bankers Association. The number is expected to rise.
In a 20-page summary handed out to lawmakers, policy makers and regulators, Credit Suisse said the plan would make $89 billion in subprime loans eligible for refinancing. Credit Suisse spokeswoman Victoria Harmon said bank officials have "shared our ideas and technical advice on FHA" and received "constructive" responses from the government.
It would be a staggering bailout (and grossly unfair to prudent lenders, renters, and the vast majority homeowners) if Wall Street convinces Congress to stick U.S. taxpayers with this stinking mass of bad bets (that likely include fraud and reckless speculation.) That's not how capitalism is supposed to work.