Big surprise that yesterday's blog garnered quite a few responses, not just on the page, but from folks here in DC who are involved in all those closed-door negotiations at Administration office buildings.
From one insider:
"The write down would be a more honest way to align values with debt, instead of indirect incentives designed to modify behavior. The administration should temporarily adjust accounting rules to allow banks to amortize the write down so that they do not take an undue capital hit."
This is precisely what House Financial Services Committee Chairman Barney Frank is alluding to, when he wrote, in his letter to the top four second lien lenders (B of A, JP Morgan Chase, Citigroup and Wells Fargo), "Because accounting rules allow holders of these seconds to carry the loans at artificially high values, many refuse to acknowledge the losses and write down the loans, which would allow willing first lien holders to reduce principal and keep borrowers in their homes."