As difficult as this may be for all of us, a round of congratulations are in order for the Loyal Opposition. If my understanding of the situation is correct, the Republicans have fully embraced a New Deal ideal and run with it. Sometimes, it takes awhile for the virtues of a strong, socialistic economy to sink in. "Ronnie? Oh Ronnie? Where are you?"..."Spinning Nancy, spinning Nancy."
Yes, indeedy. The Republicans have added what seems on face to be a nice little addition to the bailout package - industry-financed insurance for mortgage backed securities.
LA Times A House GOP leadership aide said the agreement included an insurance program sought by Republicans under which financial institutions would pay premiums to help pay for bailing out less solvent companies
Right now, it is unclear as to whether or not institutions may buy insurance for the existing worthless paper. I doubt this will happen though. What "insurance company" (member institutions) would let people buy insurance as one Hill staffer said "while your house is on fire?
Prior to this existing bailout, there was no insurance ala FDIC for the securities. From Investopedia:
To review, an MBS is a security, created through the process of securitization, in which the underlying assets are loans made to individuals and companies who are using the funds to purchase buildings and homes. The mortgages are secured to the lender by the properties purchased by the borrowers, and are often backed by some form of homeowners' insurance. However, this insurance will only protect the issuer of the mortgages (mortgagee), and not the owners of an MBS that is issued using the same underlying mortgage. Therein lies part of the risk to MBS investors.
In my opinion, a regulatory body (either publically or privately controlled) such as the one included in the bailout will have to review the underlying asset (mbs) prior to the issuance of any "policy". Now I am no banker, but the FDIC (at least I hope) verifies the existence of a deposit down at the local bank before it would cover any loss.
Anyhoo, how about a good ol' fashioned Bronx Cheer for the Loyal Opposition (trademarked, copyrighted...permanent). Their warm embrace of the nationalization of our financial system is most welcome. kind of like a warm cuddly Teddy (Roosevelt) bear.