Mixed Feelings on US Lenders
Foreign banks are watching with interest and fear as the US works frantically to rescue it’s troubled housing sectors. With $100 billion promised by US banks, it seems that something may actually result from the intervention. Whether that result will be positive remains to be seen.
Marketwatch has an interesting commentary regarding this:
The world’s top banking overseer has reservations about the $100 billion rescue package planned by U.S. banks and believes U.S. banks could be temporarily at a competitive disadvantage to their foreign rivals because of the slowed implementation of new capital requirements.
Nout Wellink, the chairman of the Basel Committee on Banking Supervision who is also president of the Dutch central bank and a member of the European Central Bank’s Governing Council, discussed the recent credit-market turmoil with Joellen Perry of The Wall Street Journal and Damian Paletta of Dow Jones Newswires.
WSJ/Dow Jones: What are your thoughts about this new superconduit that’s been proposed?
Wellink: For the time being, I have mixed feelings. …What is exactly the idea behind it? Is it a way of escaping your fate? Because if there is no market, at a certain price, then you’re confronted with losses. Take these losses. …As long as it’s meant to create an orderly process, okay. But if these artificial elements are involved, then immediately the supervisor and the central banker uses the phrase moral hazard.
With refinances and home equity line of credit loans made available, the housing crisis may be averted. Many fear that all of this will only be delaying the inevitable, and have no positive long term affects.
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