Thomas A. Russo (2008): Credit Crunch: Where Do We Stand?: "The recent market has been, in many respects, worse than it was in August. The lack of confidence in pricing has led most buyers away from mortgage products, and there are few buyers in the market with both the balance sheet and expertise to understand any 'bargains'...
...Some things that might be done are... legal clarity that the fundamental policy for dealing with the subprime issue should involve broad-brush approaches rather than traditional loan-by-loan analyses.... Programs should be targeted to homeowners (not investors) with ARMs who are or will become delinquent as a result of resets and are unable to refinance because of credit issues or property value declines.... Since the U.S. housing stock is worth about $23tr (or about $10tr more than annual U.S. GDP) a drop of 15% would reduce wealth by about $3.5tr. Policy-makers should carefully evaluate opportunities to reverse the trend in this diminution of wealth and, thereby, also stimulate all the by-products of the housing industry.... A lot is at stake for the economy, and all actions that add liquidity or help prevent distressed sales that exacerbate the problem, are worthy of consideration (even if they are somewhat “out of the box”). Emphasis should be placed on developing a portfolio of actions, some of which could be temporary in nature, rather than finding a magic bullet!...
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