Filed under: Market matters, Amer Intl Group (AIG), Housing, Cramer on BloggingStocks

TheStreet.com’s Jim Cramer says Pennsylvania’s foreclosures are declining, thanks to a plan that can be applied nationally.

We keep hearing how the AAA paper is unfairly being marked down because of the “need” to sell. We hear that if the paper, particularly the mortgage paper, were allowed to be held, there would be no problem, that, for example, the Thornburg (NYSE: TMA) (Cramer’s Take) paper, which is most likely not going to default, or the paper that AIG (NYSE: AIG) (Cramer’s Take) is insuring, the so-called super senior, which is also most likely not going to default. We keep believing that the real issue is the markings, and how the markings reflect unrealistically depressed valuations.

Obviously the Fed believes this, too or it wouldn’t have been so complacent. So why doesn’t the Fed puts its money where its mouth is, and do something, non-bailoutish, that exploits the market’s imperfection. Why doesn’t it issue $50 billion of two-year notes at 1.60% and take the money and buy high quality mortgages and other collateralized obligations, the very stuff that everyone says will pay off over time. Then the Fed can make money holding the stuff, the banks get more liquid, which takes the pressure off their balance sheets, and no bailout occurs?

Continue reading Cramer on BloggingStocks: Fed needs to follow the Pennsylvania plan

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This entry was posted on Tuesday, March 4th, 2008 at 11:55 am and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.