Maxine Waters brings the crazy

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Feb 11 2009, 1:24 pm by Megan McArdle

Her questions to the bankers are so bizarre that they don't know what to do. Ken Lewis looks like a deer in the headlights as Waters asks her about offshore loss mitigation efforts. He can't even figure out what she's talking about, and neither can I. She also asks the bankers, few of whom are in the credit card business, how many of them have cut credit limits to people on the basis of where they shop. It's like watching your crazy aunt challenge your boyfriend to prove that fairies aren't real.

Comments (1)

Steve Koch February 11, 2009 2:26 PM

I think offshore loan mitigation refers to loan mitigation that is outsourced to somewhere like India. Loan mitigation is the negotiation process between a lender and a borrower aimed at reaching a new, negotiated loan agreement before the lender forecloses on the borrower.

I think loan mitigation may soon turn into cramdown. No need to outsource cramdown.

The reason that it is in the lender's interest (sometimes) to negotiate a new loan rather than foreclose is because lenders typically take a loss on foreclosed properties in a down market.

My experience at buying foreclosed properties is that banks tend to be incompetent at marketing their foreclosed properties and leave a lot of money on the table.