Senators Baucus and Grassley
Finance Committee, United States Senate.
Senators,
Sirs,
The current turmoil in the in the financial markets is frightening and to a degree, somewhat misplaced. The large lending institutions are writing off billions of dollars of loans in the aftermath of the collapse of the housing market. The irony is that these assets have not disappeared. Their value has diminished; but they are not worthless. A loan has a number. When these large financial institutions sold these CDOs and SIVs , did they erase the loan numbers? Can the ultimate destinations of these mortgages not be found? This is not like the IT Bubble at the turn of the current century, when start ups with PEs of 300 or 500 or nothing came public on a wing and a prayer. Homes have value.
The lenders are writing off assets as though they are forever lost. After the write downs, will not these assets be found? The banking and financial institutions, through write downs, are going to charge all of us by taking immense tax write offs and then, surprisingly, someday find these loans and recoup a major portion of their losses. These assets have not disappeared. Their value is certainly diminished; but it is not gone. That is why property is called Real Estate. It is real and is not ethereal like a failed Dot Com.
This is not a not a call for investigation as much as a plea for sanity in a world of financial madness. My desire is more a request for calm analysis and introspection upon the somewhat overblown panic that is currently gripping our wonderful country.
Please ponder this reality and use your wisdom to bring perspective to this situation.
Respectfully,
Ronald Freeland