Buck's testimony before the joint finance committee

Mr Frank: Good morning, Buck. Thank you for taking the time to be with us today. We know how busy you are, so it is indeed an honor. My colleagues and I, from both houses of Congress, on both sides of the aisle, and up to the other end of Pennsylvania Avenue are waiting to hear your ideas on how this government should react to the current financial crisis. You have the floor.

Buck: Thank you, Barney. As I said to you over doughnuts and coffee this morning, we aren't completely fucked. I intend to enlighten the country on my plan for disentangling our banking system from all its problems. By the way, you might want to wipe the jelly off of your shirt. Please excuse me if I have to vacate during the testimony as coffee and doughnuts often leads to cramps. And cramps can lead to...but I digress.

Yeah, you guys seem to have the easy stuff in hand - Unemployment benefits, aid to states and municipalities, a new pool of cash for capital projects, the inevitable cash payments to all made standard by the Bush Administration. But you still haven't tackled the "troubled assets" that started this tumble and represented the "TA" in the TARP fund.

Mr Frank: You're so clever, Buck. Please get to the point or I will hold you in contempt.

Buck: I urge the federal government to create a short-term program to convert near-foreclosure and upside-down home mortgages into fixed rate, long-term, federally guaranteed mortgages. But the first step in this process would be to declare a 90 day moratorium on residential foreclosures, as has already been wisely proposed by several esteemed leaders at both ends of Pennsylvania Avenue.

Mr Frank: Spare us the flattery, boy. Get back to your proposal.

Buck: During this 90-day moratorium the White House, Capitol Hill committee members and leading bankers should sit down to negotiate a deal. The framework of these talks would be to set up guidelines to payoff the troubled mortgages at a discounted rate, and write new mortgages to the estimated 12 million American households who find themselves in this situation. A new, nationalized mortgage agency (BNMA) would be created....

Mr Frank: BNMA?

Buck: Yes, Buck National Mortgage Association or Barney National Mortgage Association if you prefer the flattery. (heh heh)

Mr Frank: I'm intrigued, my colleagues are intrigued, the nation is intrigued. (heh heh) Please continue.

Buck: The BNMA would be set up much like Freddie Mac is right now, only it would be completely nationalized and strictly controlled by a charter written by this committee and enforced by an adminstrator named by the White House.

A key component of this new batch of mortgages is that they would be written without an appraisal. The principal amount of the new mortgage and the payoff percentage to the prior loan servicer would be a calculation based on outstanding principal, overdue interest and the other factors such as credit scores or items the committee deems wise.

Mortgage brokers would be paid either a flat fee, percentage, or combination as determined by the committee to bring these loans to settlement. Removing the appraisal requirement and having a narrowly defined set of calculations should made the process relatively fast. It will need to be fast, because we have 10 million plus mortgages to write while the financial markets are held in a flat or bear state.

Mr Frank: Sounds good. Any questions from my esteemed colleagues?

(silence)

Mr Frank: Thank you for your time this morning, as we know how busy you are.