Seymour Zises, President and co-founder of Family Management, writes bi-monthly opinions on issues and observations of relevance to clients and investors.
Approximately 8 million homeowners have negative equity – that means they would owe the bank money if they sold their homes! If home prices decline another 10%, the number would double to nearly 16 million homeowners. The events that have transpired in the financial world over the last few weeks are unprecedented, and ultimately raise the question, “Was the repeal of The Glass-Steagall Act really in the best interest of the nation?”
$7 billion here, $7 billion there. Sooner or later, it adds up to real money. Societe Generale’s rogue trader was only 31 years old. It took many older and wiser American Wall Streeters to lose that kind of money. Scary, isn’t it? What is most concerning about the current mortgage securities meltdown is not that credit was extended to many who did not deserve it – it’s that there was the lack of checks and balances in the system that permitted it to happen.