The facts are that when there is a world-wide crisis and potential solutions are proposed, not everyone will be happy with these proposals. Such is life. But when it comes to our economy and the mad dash to hold on to cash, many investors on Wall Street are not going to accept these proposals lightly.
Take for instance the bewildered and beaten down hedge fund industry.
The two funds — Greenwich Financial and Braddock Financial — hold securities backed by mortgages, and they argue that the terms of the underlying loans cannot be changed without their consent.
William Frey, the president of one of the funds, Greenwich Financial Services of Greenwich, Conn., said that he was acting to protect the firm’s investments. “Any investor in mortgage-backed securities has the right to insist that their contract be enforced,” he said.
In letters sent to banks and others, Greenwich Financial said that it was particularly concerned about the impact of a relatively new government program, Hope for Homeowners. That plan, which Congress approved over the summer, allows some borrowers to refinance their mortgages into fixed-rate loans with terms up to 30 years.
The problem with the mortgage and housing crisis is that there is a terrible disconnect between Wall Street, Washington and Main Street. A Wall Street and Washington created division of economic classes of people who now have seem to become unwillingly intertwined in a tangled web of contracts and toxic assets.
However we try and cut it, we are ALL in this together and a “happy medium” must be found in order to ever make any head way with solutions to this crisis.
These hedge funds are another example of a “broken economic system.” Everyone is going broke and crying wolf and in a time when we all should be coming together to take our losses in unison.
The Center of Responsible Lending’s President said it best in response to the above hedge funds. “We can’t try to operate in a crisis and think that we will be able to satisfy all the lowest common denominators like hedge funds,” said Mr. Taylor.
I agree with John Taylor because many of these hedge funds were nothing more than unregulated boiler rooms that made billions of dollars off of these toxic assets they hedged and sold around the world. A lot of them had their hands in the world wide ponzi scheme with Mortgage Backed Securities and their risky “bets” have gone bad.
Now, that their investors are pissed, these funds need to find a scape goat to blame their loses on. They will not take blame for the facts that the investment sky is falling, their stocks are worthless, their investment advice sucks and they were nothing more than used car salesman with degrees and addresses on Wall Street reincarnated as hedge fund managers
NY Times:
Officials at banks and policy makers who have pushed for loan modifications say the servicing companies have the right to change loans if doing so will maximize returns to all investors.
“We think that by doing more modifications rather than less, investors are going to be better off,” said Tom Miller, the attorney general of Iowa and a leading proponent of aggressive loan modifications.
So far, disputes over loan modifications have been largely theoretical because most mortgage servicing companies are not aggressively altering the terms of loans and the government’s refinance program is just two weeks old.
But lawyers expect the tension over the issue to build. In authorizing the Treasury to buy $700 billion in mortgages and related securities last month, Congress instructed the Bush administration, as an investor, to modify more loans.