Friday, September 18, 2009

Treasury Backing 85% of New Mortgages

Today's WSJ illustrates that the mortgage market remains frozen. The Treasury is backing 85% of new mortgages and the Fed is purchasing 80% of the securities into which the mortgages were packaged.

The question is, "Why aren't the banks lending with all the $$$$ pumped into their operations by the Fed?"

The answer must be that the banks are (a) either still insolvent or (b) are quite concerned about further debt defaults on mortgages, credit cards, etc.

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