Former Federal Reserve chairman Alan Greenspan testified at a House Government Oversight Committee hearing, "that as a result of the current situation the United States is heading for a "significant rise in layoffs and unemployment" and a continued downturn in home values as the world works through a crisis that is "broader than anything I could have imagined."
Greenspan called for "imposing some of the same sorts of regulations on mortgage securities he resisted when he was in office, acknowledging that the current financial crisis had exposed "a flaw" in his view of how the world and markets function."
The absence of significant controls on how mortgages are repackaged into larger and more complex securities has been cited as a central cause of the current financial crisis."
Greenspan told committee members he saw "no choice" but to force the financial firms that package mortgage loans to "retain a meaningful part of the securities they issue" -- thus keeping them on the line if the underlying loans go bad."
The entire article can be read here: By Howard SchneiderWashington Post Staff Writer Thursday, October 23, 2008; 12:19 PM: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102300193.html?hpid=topnews
FDIC may guarantee some mortgages:
FDIC Chair Bair said "new efforts to stem foreclosure are needed, even if it means the Treasury offering to absorb losses on some soured mortgages."
"Loan guarantees could be used as an incentive for servicers to modify loans," Bair said. "Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards."
The entire article can be read here. By Peter Whoriskey and Kim HartWashington Post Staff Writers Thursday, October 23, 2008; 12:19 PM http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102301517.html?hpid=topnews