The Fed has opened the loan window for collateralizing loans with MBS (mortgage backed securities). There are three little hooks in this:
First: the statement said these MBS would be "appropriately" valued - the mess we are in is because even the banks couldn't appropriately value them. Are you telling me a bank examiner is going to be looking at these before they are accepted. In that case, expect first loans to occur in 2015.
Second: Freddie Mac chair came out today and said:
I expect we have only seen one third of the eventual drop in housing prices (my paraphrase)
So, what will happen to the MBS collateral as the market drops - the Fed will revalue and ask for more collateral?
Third: The amount of ARMs resetting every month through mid-2009 is over $40 BILLION per month. That means this $200 billion, at best, covers the next five months. Right up til just before the election.
The Freddie Mac chair just put the needle to the balloon. How can the MBS be accepted at anything except a 50-75% haircut? If so, how is this liquidity event helping anyone.
See: Graveyards, whistling for further explanations.