Felix Salmon

Why can’t borrowers buy back their mortgages at a discount?

Thornburg Borrowers Unite is a new blog for people with mortgages from now-bankrupt Thornburg. Those mortgages are for sale, at a discount: why can’t the homeowners themselves buy them back? “If Thornburg can be persuaded to give its borrowers right of first refusal,” goes the argument, “it costs taxpayers nothing, and it prevents third parties from profiting from our losses and the demise of Thornburg.”

Usury datapoint of the day

overdraft.tiff

The typical overdraft fee these days is in the $35 range. And how much is borrowed when people get an overdraft? The thing is that most of the time the overdraft is inadvertent — which means that the account drops only a tiny bit below zero. In the case of debit-card transactions, the average overdraft is only $17. And as a result, as the chart above shows, if you go overdrawn as a result of a debit card transaction, you’re likely to pay $1.94 in fees for every dollar you borrow.

Thursday links look at fixed-income investing

Regulatory Capital Arbitrage: “With hindsight, there was too little capital allocated for mortgages originated between 2005 and 2007. Then again, with hindsight, they had a negative NPV, and should not have been issued by any rational profit maximizing firm.”

WSJ.com’s barbell strategy

Zachary Seward has an interesting interview with wsj.com’s Allan Murray, who is sounding reasonably similar to the FT’s Rob Grimshaw, although even Murray says that he finds FT.com’s bizarre business model “very confusing”.

Greenspan’s reputation continues to decline

Neil Irwin has a nothing-new-here profile of Ben Bernanke in the Washington Post. What struck me, however, was the way that his collegial style was characterized very much in terms of what (and, implicitly, who) it’s not:

Annals of no-comment, Meredith Whitney edition

David Weidner speaks to Meredith Whitney:

When I asked Ms. Whitney this week if she deserved acclaim for The Call – in particular credit for calling the meltdown – she declined comment…

The Geithner plan vs the Brady plan

Mohamed El-Erian is interviewed over at FT.com, and at the beginning of the first interview, at about 1:45, he says this:

The return of the day trader

Jane Kim is the latest journalist to do a story about day-trading retail investors, and boy has she found some doozies:

Pay no attention to Moody’s Berkshire downgrade

Let’s say that Berkshire Hathaway carried a double-A credit rating from both S&P and Fitch, but retained its triple-A from Moody’s. Would anybody pay attention to the Moody’s rating? Of course not: Berkshire owns more than 20% of Moody’s, it’s a huge and loyal shareholder, and any Moody’s rating of Berkshire is fraught with conflict.