Harry Rady has been at the forefront of the investment and hedge fund industries for a number of years, serving as CIO (Chief Investment Officer) in a number of companies, across varied fields and financial spheres. There is a lot of information available about Rady’s past achievements as well as his current activities.
Visit Business Week’s site on the internet for some of the information about Harry Rady and the different companies he holds positions in.
March 3rd, 2009 at 9:52 pm
I sent this to every federally elected reresenttive and senator, Lou Dobbs, Jim Cramer and the White House. No one had courtesy of a comment. I just saw you on CNBC and heard you say almost the exact thing. Why won’t the government do the right thing?
It seems to me that a huge part of the present economic problems began with the housing/mortgage business. From what I understand a big problem was ARMs where people obtained good rates, were able to afford payments, but were hit with big rate adjustments which they could not afford. This began the sell off which drove property values down, which caused banks to call in loans because the value was no longer there.
This escalated out of control and now we are plagued by low values, a multitude of defaults and banks that can’t or won’t extend credit. I do not know the numbers; it seems it is not public info. But instead of funding the banks directly why don’t we try to work with everyone involved? Let’s forget about values for a minute.
Let’s address the fact that a number of people borrowed money, promised to pay it back and probably would be paying it back if the rates did not change. Let us say the average interest rate, as a result of ARM was 8%. Suppose we tell the property - owner, “we do not care of the value of the property, we care about your promise to pay. We are going to make it easier for you. Pay us 1/2 point above prime, or 4%. We will give you a 30 year mortgage.” The people will pay. The ones that don’t pay deserve to lose their homes. They were probably investment properties anyway. But do not let the people who default get away with filing in a bankruptcy. We have now stopped the downward spiral of values because the foreclosures and desperation sales stop. People actually have extra disposable income because the interest rates are so low. If they were originally paying 6.5% on a $200k property they would have paid about 13k per year ($1083.00). At 4% they would pay $8k ($667.00). That is over $300.00 per month per family per $200k. Money to pay down principle or into the economy
Now let us say there are one million families in this situation. That would be $200 billion in mortgages. Because I do not have access to the exact numbers let’s just multiply that by 4. $800 billion in loans to 4 million families. Payments are being made, principle and interest. But now the banks say “wait a minute we had loans at 8% why should we take the hit”? Answer, you helped create the mess, you have no idea how much bad paper you would endure before closing your doors. Be happy you are still functioning. The difference between 8% and 4% is 4% and 4% of $800 billion is $32 billion. Allow the banks to take tax breaks against the “losses”. This will not cost anything to the taxpayer. If the government was to give the banks there full amount the exposure is $32 billion. Maybe give half. $16 billion to save 4 million homes? That what was promised to the auto industry in the first round.
Now to make it fair everyone who has residential property should be able to take advantage of these rates. Interest rates are at 5%. The banks would lose 1%. Multiply the 4 million by 20. That’s 80 million homes. Divide the 32 billion by 4 because 1% is 1/4 of 4% and you get $8 billion x 20 or $160 billion. Add on the original $32 billion and total government exposure is less than $200 billion, which is 27% of the original TARP.
I do not claim this to be the complete answer but it sure seems this would help resolve a lot of problems. I suggest someone with the correct numbers use my logic and see if something comes of it. It can’t hurt. This would solve a lot of housing and banking problems and create a lot of stimulus money in the hands of the everyday people.