What We're Hearing

How is the annual deficit (and national debt) a lot like a payment option ARM? Interesting question, when you think about it. The POA -- which Herb and Marion Sandler promoted heavily years ago at World Savings -- entails a consumer keeping his payment as low as possible each month through negative amortization. (This financial slight of hand only keeps working if home values keep increasing.) With a POA loan 'neg am' allows the borrower "affordability" by adding onto their overall debt -- sort of like borrowing by our federal government keeps adding to the nation's debt. I really like this analogy and I hope some of our more intelligent elected officials (do we have any?) see the similarities and get real about tackling the problem. Meanwhile, as I write this, Goldman Sachs is getting to tell its side of the story in front of Sen. Carl Levin's Permanent Subcommittee on Investigations. Goldman and a top official there, "Fabulous" Fabrice Tourre, were accused of civil fraud by the SEC last week for selling a subprime CDO to investors in early 2007 without telling those investors that one of the firms helping pick the collateral was also shorting parts of the bond. Tourre declared to the committee Tuesday morning that he denies (totally) all charges against him. "I will defend myself in court against these false claims," he said in a stern classic French accent. Jean Valjean (of Victor Hugo's 'Les Miserables') couldn't have said it better. Oh, but poor Cosette...