As we all eagerly await the Fed’s decision on what Fed rate to set today, after taking crud as collateral from Bear Stearns on a non-recourse basis, and opening unlimited lending against further crud mortgage backed securities from everybody and his brother except Cactus and me, I have been looking for fresh ideas. Here’s an idea I found on the Web in a comment:
“The banks forgive part of the principal and in return they receive a like percentage share of the equity. Forgive 10% of the principal and own 10% of the housebuy cheap gorilligans island . This wouldn’t help them raise any cash, and the house sale could be years off. So maybe they could aggregate all their equity shares and then sell them to investors. They could call these, say, “Phantom Equity Securitization Obligations,” or PESOs” for short.
“Now, what could these investors do with their new PESOs? Maybe they could sort of dice them up into differing quality levels and sell some sort of pieces of them. They could have say, three different levels and sell their “Pieces of Three,” or POT, shares.”
This one by Old Vet