Why Freezing Rates is Bad and Dangerous
By mike volpe Posted in Policy — Comments (53) / Email this page » / Leave a comment »
Congressional aides say the Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures.
These aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of as much as seven years and industry arguments that the freeze should only last one to two years.
Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.
This is a dangerous and bad policy on several levels.
1)Whenever the government steps in on a private contract and renegotiates it, it leads to all sorts of unintended consequences. In this case, banks use extremely sophisticated modeling techniques to determine the interest rate that borrowers receive. Those models take into account whether or not a rate will eventually begin to move or not. By freezing rates for five years, he has thrown those models totally out of whack. In other words, the risk profile of these loans no longer matches the rate as determined by the models. This not only throws banks out of whack but Wall Street as well that turned those mortgages into bonds.
Whatever liquidity problems are currently in the market, those are nothing like the liquidity problems that will be created when loan terms are changed wholesale. If banks don't receive the rate, and the underlying payment, that they expected, then we will really see some liquidity issues. Remember, one, banks expect to take homes when payments aren't made, and two, they expected certain interest rates and payments from mortgages. Now, they will get neither, and their money is tied up expecting both.
This nightmare is further perpetuated because the definition of sub prime is not clearly defined. For instance, one of the big problem mortgages are option arms. Many of these mortgages are what we refer to as monthly ARM's. That means their rate changes every single month. If Bush includes these into sub prime, he will simply create a nightmare for the banks. Since they are monthly ARM's you can bet that much of the underlying rate was based on a model that had that rate moving every month. If that rate is now frozen for five years, you can bet that banks will take a giant financial hit.
Keep in mind that if you don't care if banks take a hit, you should. If they take a hit, they will pass that hit onto the consumer in terms of higher rates on all future mortgages.
2)Bush has now also created a moral hazard. The folks that he is saving took on a mortgage profile, a rate that adjusts, that they shouldn't have. This was entirely by choice. Now, he is stepping in and stopping an event that is supposed to happen to an Adjustable Rate Mortgage. Instead of learning a difficult and valuable lesson, these folks will now get the message that risky financial moves can be met with government interference to save them before those risky moves turn into consequence.
3)Bush has now created a litigation nightmare. There are all sorts of folks that are currently in fixed rates, five year Arms, and other loans in which their rate either doesn't adjust or hasn't yet adjusted. Those folks are holding onto mortgages with higher rates than the folks who's rates he has artificially frozen. They will all scream bloody murder and demand that their rates be adjusted downward. They will be right. Imagine if you took on a fixed rate which was a higher rate than the equivalent adjustable rate. You did this with a certain financial loss, at least initially, because that rate was higher and with it the payment. Now, you hear that folks that didn't take the same precautions as you are now having their rates frozen for them artificially and will now enjoy lower rates, artificially again, for at least five more years. You would, rightfully so, feel entitled to the exact same rate. You would likely get a lawyer and I firmly believe that Bush has now opened banks up to all sorts of lawsuits.
4)Finally, and this is coming from an insider. This rate freeze isn't going to do anything of substance. The people that Bush thinks he is helping are in over their heads. I know because 99 times out of a 100 my borrowers always bought a property that was more expensive than one they claimed they wanted to buy. The sort of sub prime borrowers that Bush thinks he is helping are irresponsible. They bought 250,000 dollar homes when they could only afford 200,000 homes. That dynamic is not going to be changed by freezing rates. These folks maybe able to afford to make these payments for a while longer but not forever. They are still in over their heads. Also, what about all of those folks that are in Prime loans that are adjustable rates. Won't they also demand that their rates be frozen? Won't everyone who is on time demand that their rate either be frozen or lowered? By helping the most desperate and the most irresponsible, Bush has now opened up a can of worms that he frankly can neither predict or control.
if you did, then you call your bank and scream bloody murder. You find others like you and you find a class action lawyer and you sue. There is absolutely no reason why someone like you should get short changed for doing the right thing. I said there would be lawsuits and I am telling you that your proper course of action is to sue. There is absolutely no way you should accept this. You absolutely should also have your rate lowered.
Always tell the truth, George; it's the easiest thing to remember.
Right on the mark - government bailouts of programs or forced agreements of this pushes people to think that the government will always take care of them. The market needs to work this out.
And when this goes poorly (which I expect it will), who will be blamed...Bush.
Erik
#1. Mike, your drum beat that subprime borrowers are just a bunch of deadbeats is bulls**t. First of all, the default rate is slightly higher than for prime borrowers (for now), but 98% of subs still make their payments. The PROBLEM today is not driven by their credit profile, it's driven by the falling value of their house. And nationally, vs. 2005 peaks, we're probably looking at a value reduction of 35%+ before all is said and done.
#2. We have three waves of "problem loans". We're in the subprimes now. Starting in the second quarter the same thing is going to be happening to those folks with the 750 FICO scores who could document their assets and income. Three and five year ARMs are due to adjust and guess what, a 2% initial bump on a 3.5% prime 3 year ARM will still cost the borrower the same $377 per $100,000 as it does a subprime borrower. Guess what. Those folks don't have much more in reserves than the SISA subprime guys. The primes will "boom" next year.
#3. You rightly mention Option ARMs. Those are set to reset in 2009/2010, but will reset early based on only minimum payments. They will likely start late next year. Those bumps will be a heck of a lot more than $377 because they are paying the lower minimum rates. Those payments could easily jump as much as $800 to $1000 per $100,000 when they hit the fully indexed rate. These folks are, by and large, all prime borrowers too.
Now then, with respect to freezing start rates, I am opposed to the feds doing anything at all to bail out anybody for any reason. That said, I have less problems with a subprime freeze because for the most part those rates are substantially above market for prime loans. The real problem comes in with the prime ARMS and the Options, both of those have start rates well below the current available rates. The subprimes will be a financial blip on the balance sheet, especially if you factor in the difference a significantly higher default rate will make, but the primes and Options will be an absolute, utter financial disaster.
All GWB is doing with this silliness he's proposing is buying about nine months to a year before the fit really hits the shan.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
in fact, most aren't, however the people Bush is trying to save are dead beats. They are dead beats because banks opened up loan programs for dead beats. It is as simple as that. I never said all sub prime borrowers are dead beats, I said the people he is trying to save are deadbeats, and they are. I know because, you and I both know, what ridiculous programs the banks created.
I am not nearly as concerned about the prime borrowers because people with higher scores took more care to make sure they could afford higher payments on ARM's.
Freezing the worst borrower opens up the entire market. Anyone that got any fixed rate will now demand that their rate be lowered. Why wouldn't you? If someone took an ARM and had that rate artficially frozen, why shouldn't you get the exact same deal? In fact, if there is lawsuits I venture to say they will win.
Always tell the truth, George; it's the easiest thing to remember.
First of all, according to the report I heard today, in order to qualify for a frozen rate you have made all of your payments on time. If that's the definition of a deadbeat in IL, I'm really glad I live in AZ.
I don't know what the housing market is like where you are, but in my market areas - AZ, CA & FL - prime borrowers acted just like everybody else: show me the lowest possible rate and I'll buy the most house I can find. And I'm not putting any money down with my great credit score. Amongst my realtor associates, if you ask them how many people put more than 10% down on a new house they look at you like you've got two heads.
Those are gonna blow. And the Option ARM "problem" will make our current defuglties look like somebody dropped the penny jar on the way to the wrapping machine.
Now then, when all is said and done, Washington should do NOTHING, absolutely NOTHING. They will only excacerbate the problem. In the world of "stupid stuff" that Bush has done ("D", NCLB, etc) this one has the earmarks (pun intended) to be a monumental disaster and make "D" look like a really good deal.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
then almost none of the people that need saving will be saved anyway. Then, what Bush has done is taken a huge amount of future profits away from banks in a wholesale manner and that has its own unintended consequences.
No one is saying that a lot of people didn't act irrationally, including prime borrowers, however prime borrowers, for the most part, actually thought about what would happen when their rates adjusted.
I think the markets you are dealing with are different than most because in my area at least the primer borrowers for the most part didn't get themselves into ARM's just to get a lower rate.
Always tell the truth, George; it's the easiest thing to remember.
It could just mean you haven't gone into foreclosure yet. It could just mean that you are currently caught up with your payments. It's impossible to know without seeing the actual details, which aren't available at this point.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
radio snippet. There are NO details and, as always, the Devil lives in the details.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
the real problem for banks is that most sub prime borrowers aren't dead beats. The banks were expecting a certain rate and a certain payment and they were expecting those to be paid for the most part. Now, they aren't going to get those payments. This throws their entire cash flow projection out of whack.
Always tell the truth, George; it's the easiest thing to remember.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
That is really the key question isn't is? I can't imagine the industry all decided to agree to this after looking into 43's eyes and seeing a compassionate soul.
Treasury also announced that there would be a technical briefing to explain more of the details of the proposal.
I guess we'll see... I wonder if our present or future tax dollars play into this at all, hmmmm....
keep Barney Frank and Chuckles Schumer off their backs...
It's "the Devil you know..."
And it's still a really bad idea.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
Congress is trying to pass an anti Predatory lending law. There is just one little problem...
There is no specific definition about what exactly predatory lending entails, though most observers believe that the description applies when lenders take advantage of borrowers by charging high interest rates and consider only the value of a borrower’s assets, as opposed to what the borrower can afford to pay.
in our business when you legislate something you can't define then the practical effect is that you the consumer,
HAVEN'T SIGNED ENOUGH PAPERWORK YET
Always tell the truth, George; it's the easiest thing to remember.
Does he have a bunch of Republican congressman demanding that their constituents be bailed out?
Henry Paulson is a pretty astute guy, I can't figure out why he is working on this deal. Is it possible that he thinks it will work out?
“.....women and minorities hardest hit”
"When somebody hurts, government has got to move."
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
The government *must* step up and help them."
Or some BS like that.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
Ben Bernanke is an astute guy, and I believe he has acted no less ridiculously in response to the crisis
The fact is that when people are suffering it elicits an emotional response and politicians are not immune from such responses. That is why bad policy like this is suggested.
Always tell the truth, George; it's the easiest thing to remember.
the last loan I closed about a week and a half ago. A guy took a higher payment in order to get a fixed rate because in June their two year arm was going to adjust. I just realized it and now the loan was done solely for my benefit.
Always tell the truth, George; it's the easiest thing to remember.
a) I agree with Bob Frazier on his parallel with Nixon...that was exactly what I thought of when I saw this story. Tampering with stuff like this is just going to screw with the economy
b) What the heck happened to personal accountability? The people with these variable rate mortgages knew there was a possibility that the rates would go up...and if they didn't, shame on them for not reading the fine print. They set their own table - they should have to eat at it.
This bailout is absurd, but why should I expect anything else from Mr. Compassionate Conservative?
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this crisis it is irrational exuberance. Everyone "knew" about the consequences, however everyone assumed that property value would go up forever. That is what ultimately explains the behavior of the banks, the borrowers and Wall Street.
These borrowers knew that these mortgages would adjust they just figured that after their property value went up ten to twenty percent they would be able to refinance and get a lower rate and fix it in. In that hypothetical, they were right, they just never accounted for what would happen if that hypothetical didn't happen.
Always tell the truth, George; it's the easiest thing to remember.
Or maybe just worded clumsily.
It's kind of like saying that drug dealers shouldn't get punished worse than drug users.
Nobody should have to read fine print on decisions of great magnitude. Many of these lenders used psychology on their victims by repeatedly and accurately pointing out the fantastic increases in property values and that the borrower is "qualified" to participate - hence the "teaser" rates.
You can't tell me that many of them didn't use casual remarks such as "once the value of your house increases anyway, you can always refinance."
I'm not saying they should be let off the hook, but it would be nice if people weren't thrown out into the street. The speculators knew the risks and I have no sympathy for them, but many bought the house their family lives during a climate of easy lending and large increases in property values.
I am sceptical of this federal plan though. As policy, it has the possibility of extending the duration of the problem and it will might have the effect of drying up even more liquidity.
You want to abrogate contracts because people are going to be inconvenienced and suffer some short term discomfort. And in the real world, that's exactly what we're talking about.
Where would you like to stop? How about the unfortunates who got themselves into car leases they can't afford? Wanna give 'em the car? Then there are those nasty credit card contracts where if your credit score drops or you miss a payment your interest rate ratchets up dramatically. We need to help those folks too.
Any help from the feds will extend the current problems from a 2-3 year adjustment to something that looks more like ten years. And BTW, the fundamental problem driving everything is the fact that the housing market is overvalued by something on the order of 35%. Just how do you think the feds should intervene to fix that?
Oh, and while we're at it, the next time we have a sizable stock market correction, should the feds step up and pour money on that problem too?
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
you last sentence is funny.
That the housing market is overvalued is in itself what feeds the frenzy.
Seemingly smart people have been buying homes in California at prices 10 times their annual income. I don't care is someone has perfect credit and a letter from Jesus Christ, I'm not lending them the money for a house unless they have 20% down.
Instead we have lenders using "teaser" rates. Why did they do it? Why would they make loans with minimal down, and knowing the rate reset will mean the borrower would be paying something like 70% of their income to the mortgage?
the top bizarre postings I've ever seen on RedState.
First, your analogy is patently absurd (speaking of absurd). I don't even understand what on earth you're talking about. We're talking about personal accountability for one's decisions. "Drug dealers" are irrelevant. If you are equating "drug dealers" to mortgage lenders, then you are waaay out there, and becker oughta sick Franz on you. The "drug users" to use your bizarre analogy, are the loan recipients, and I say they are responsible for their own bad decisions. Use drugs? You pay the price. Use variable-rate loans without understanding and being prepared for the consequences? You pay the price. Both drugs and variable rate loans have a positive (in a twisted way, re: drugs) for the recipient...but you gotta take the bad with the "good."
I cannot believe that anyone would be so daft as to excuse someone from not reading the documentation on a financial transaction. When I've obtained loans for homes (I'm on number four now), I have read every paper that I was given, and I didn't really care how long it took at the title company to go through that process. When I sign a piece of paper, I am taking responsibility for knowing what I'm signing. Anyone who signs paperwork without reading it gets exactly what they deserve.
As for "casual remarks," talk about an claim without basis. So again, you're calling mortgage lenders "drug dealers" and liars and accusing them of dishonesty. Nice. Prove it.
I defy you to show me a single family who's "out on the street" as a result of one of these foreclosures. Yeah, maybe they've had to move into an apartment or some other rental. I seriously doubt that any are living at the Salvation Army. Nowhere in the Constitution is it written that home ownership is a God-given right that must be protected by governmental action.
Your last sentence is the only sane thing you've written. Another in a long string of "unintended consequences" of compassionate conservatism.
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I bought a house in Jan of 04, I got about 5.375% interest, and that's fixed rate. It's my first house. That fit what I could afford, I bought the approximate amount of house that was appropriate for my income, resources, and prospects.
I had steadfastly refused in the 5 prior years to 'reach'. Could have, and didn't. I could have gotten an ARM at probably 2.5% (or something, I don't know, because I never came ANYWHERE CLOSE to considering that).
And sure enough, 2 months after moving into my house, I quit my job in a fit of rage (the only time as an adult I've EVER done something like that). And I'll just say that I somewhat misjudged the market for my services - it took me 4 months to find a decent new job, and my new job wasn't that good.
This pretty much used up all the buffer zone I had built myself. It took me 18 months to really, fully recover from that foolishness.
So imagine if I had bought 'too much house', and then any kind of setback happened. I would have been screwed good, probably foreclosed, and credit ruined for a good, long time. Even worse, probably would have had to sell my Supra.
So I bought a house when I could realistically afford it. These people who didn't, why should I have to pay for their foolishness?
Stare decisis is fo' suckas -- Feddie
You are absolutely right not to buy more than you can afford from a cash flow and total debt perspective. However, you were wrong not consider an ARM.
For example, assume you took out $200K on your house at 5.375 for a 30 year fixed instead of a 4% 5 year ARM (I don't know what would have been available to you in 04 so I'm using what I refinanced for in 9/03). Come January 2008 you will have paid ~$41,000 in interest on the fixed instead of ~$30,250 on the ARM. You could now refinance at 6% for another 5 years at 5.75% (with ING, rather than let the first year adjustment take you to 6%). That is $10,000 in cash flow savings in the first 4 years that you could have been investing and growing at say a cosnservative 6%.
Now, when the next ARM expires in 1/13 you would have paid about $81,000 in interest as opposed to the ~$89,000 under your original fixed rate. Your balance will be slightly higer because you reamoritized for 30 years in 08, about $4,000 higher but your total outstanding debt+interest payments is still $4,000 above 9 years in to the loan - and all while excluding the compounding returns on your invested cash flow statements.
I don't know how long you plan on staying in your home, but the average in teh U.S. is just over 6 years.
My point in all this is don't blame ARMs, in nearly every case they are the less risky (when you include inflation risk) and smarter investments than Fixed rate, particularly the 5 year capped variety. So long as you buy within your income limitations, you can buy the same home you would with a fixed rate and have more money to save for the next one.
It's a combination of high LTV loans - nobody wants to make anything that looks like a down payment - and the drop in house values over the last couple of years, with a big drop still likely to come. Bingo, you're upside down on your house and you can't refi.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
That's exactly right - very similar to the problems faced by day traders when the tech bubble burst, if you believe any asset's price will always be going up and leverage yourself off of that bet you are eventually going to get burnt.
The wise thing to do in my case (at the very bottom interest rate of my lifetime) was to go fixed at under 6%. I understand the math you are talking about (good job on that, BTW). But I'm looking to live here a MINIMUM of 6, but quite possibly 12-15 years. Current events (the recent downturn in interest rates) are fortuitous, but it would have been EXCEEDINGLY unwise to gamble on it, in terms of refinancing.
I don't want to get all nasty on the ARM, I don't mean that at all. But I think alot of these high-risk buyers saw the low fixed rate without understanding exactly how good it was -- then saw the ARM rates, and said 'hey, THAT's even better!'. Then proceeded to buy the absolute maximum amount of house they could afford as if that rate would never change.
These people are the same ones who max out credit cards on non-essentials, treating a credit limit as 'money', and the minimum payments as a 'bill'. Doing that, writ large, with a house, is STOOOOOOPID, and yet has had predictable if very sad results.
Stare decisis is fo' suckas -- Feddie
At some point, people woke up and noticed that the value of their house was going up like crazy. And every time they turned on the TV some real estate "expert" was howling about how safe it is to "invest" in real estate because you can buy a house with little or no money down (and still can) and it was "safe" because it was "secured by real estate". There will never be a housing bust because nobody's making any more land. Etc, etc, etc.
Then people started to look at mama's nest as an appreciating asset on their personal balance sheet. And guess what? Bigger, newer, more expensive houses (not homes) were appreciating faster than older ones. So..... let's sell the old homestead and get a McMansion! And I want the most house I can get for the least monthly payment and I'm using OPM just like the guy on TV said. Wow, look at my personal financial statement! I'm gonna be a millionaire! All with no risk.
Boom.
Treat your primary residence as an appreciating asset and you no longer have any risk of losing your "home" if things go south because you no longer have a "home" you just have an asset with a roof you sleep under.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
is that stupid consumers are stupid consumers. I don't want to bail them out. Not only will they never learn, but MY money shouldn't be spent to bail out people who behave foolishly. I could have been one of those, but I simply engaged my brain, like the other 99% of people who buy houses.
Stare decisis is fo' suckas -- Feddie
It doesn't take a rocket scientist to figure out that rates might go up. Why should I be responsible for someone who made the wrong choice? I am sick and tired of my tax money going to pay to bail out people with poor judgment. This applies not only to people who don't know how to read loan paperwork, but also to people who neglect to insure their houses (e.g. flood insurance) and/or expect the government to swoop in and fix things. The nanny state has gone far too far, and this latest episode with the gubmint interfering with loan rates is yet another example.
You can't fix stupid, and the government shouldn't try to compensate for it. The only way people will learn their lessons is to pay the price for poor decisions.
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with the intermediate term ARMs that have been written over the last five years, it's not a matter of "might" go up, it's a certainty. Same with subprime.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
Why should we pay to have a fire department when...
a) Most fires are started through neglegence in one form or another.
b) There is insurance available anyway.
I'm willing to pay to maintain a fire department the so the neglegence of my neighbor doesn't burn down my house.
And do you think siad insurance would be at all affordable if we didn't have fire departments?
or even cheaper since the government is so inefficient.
How would you feel about a city building a hospital and staffing it with doctors on the city payroll, and residents could use the services for free?
The costs of maintaining a fire department are not the same as the costs of destruction of the fires - which is what insurance needs to cover.
And their are many municipal hospital's and clinics that offer reduced cost services for residents - but it is a poor analogy (with one exception I'll mention in a second).
Fires spread beond the property they start on - so in any free market system it is a good that is likely to be underfunded. Which is why it is not only appropriate but imperative that government step in to bridge the gap. Most medical services only impact the indiviudal who needs them and thus can be handled in a more market setting - the one exception are public health issues such as communicable diseases and epidemics. Which is why not only should government make certain immunizations neccesary but they should ensure that those who can't afford them are provided with them.
My point was that there are many things that can be applied to the "opting in" argument. why should an elderly person pay for public schools?
It's a legitimate question but on a personal level I will never complain about it because I have no problem ensuring the education of the next generation.
Sorry for the thread-jack.
go start an insurance company. Insure people against the value of their home dropping and not being able to refinance.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.
I promised myself (and everyone here, actually) that I would not prod and instigate and generally act trollish. It's tough, and my above post is borderline trollish.
I'm trying to restrict my posts to giving a liberal perspective without inflaming but there are some issues where there are two lines of thought on that can be argued in circles forever, and we could step in one here.
My point is to stick around long enough to engage in productive debate. My post was not productive, and in fact has led to threadjacking. I should try and stick to dispelling the "all liberals are..." debates because that is where I can compete better. I just compiled some very interesting stats about gun control from the DailyKos site that might help to dispel the "liberals want to take our guns away" issue. I will post it at an appropriate diary.
"There isn't a man alive who hasn't wanted to boot an infant." - W.C. Fields
Maybe Bush is out in front of this to keep Chuckie and Co. from doing something 10 time worse.
They could make this a campaign issue that the public doesn't understand and could easily be snowed under.
BTW I don't support it in any way.
I wonder if the government will reimburse me the 2-3 grand I paid to act responsibly since apparently I didn't need to.
If the Feds bail out the financial community, they are honor bound to bail out the hardest hit mortgage owners. Greedy manipulators of the system won't be punished, so why would you hurt ignorant borrowers. It seems hypocritical to condemn only personal, and not corporate welfarism.
This mortgage relief plan will most likely benefit no more than TEN percent of borrowers at risk of foreclosure.
An honest message of "tough love", offering no bailouts, would be kinder. This misleading message of hope, with too little to back it up, is no help at all.
This may just be smoke and mirrors to keep the Dems from using it to buy votes with their "compassion".
Dems will gleefully expose this mock fix in their "compassion" comparison.
It's bad policy which isn't even going to buy the support of those who want a rescue.
An honest explanation of why such tampering is dangerous is the only compassionate choice.
Agree with everything you say but the drive bys will let the Dems frame this and they WILL use it.
Much of this country are getting used to the idea of bailouts and the nanny state. (sadly) Lots of people here on the islands have openly told me there is no such thing as pork.
Not saying it's good policy but it's probably why.
the right to fail. If business who make lots of bad loans are not required to take a hit, then bad loan making will continue. To the detriment of the economy. Government cures are almost always worse than the disease.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
Congrats to all of us who locked into fixed rate mortgages. We just got a rock.
This is so reminiscent of the Nixon administration. Didn't we learn our lessons on freezing rates and prices in the 70's???? That didn't work out so good, did it.
Don't tell me George W. Bush is a "free trader". He isn't. He's a globalist.
This is a very bad decision, almost incredible coming from a Republican in 2007.