I have to admit I don’t know much about our nation’s Treasury Secretary. I do know that he followed orders from his boss today,and met with some of the country’s largest mortgage lenders. It’s all part of President Bush’s “Foreclosure Avoidance Initiative,” that he announced less than two weeks ago.
So in walks Angelo Mozilo, Countrywide CEO, who may as well now be the poster-child for the mortgage meltdown, all spiffy on this sunny day in DC. A little while later, during the little media photo-op before the meeting, the TS says, “This turbulence wasn’t precipitated by problems in the real economy; this came about as a result of some bad lending practices.”
Now I’m not the most politically savvy out there, but I’m no dope either. Sounded like a big ol’ wrist slap to me, with Mozilo sitting right there, in addition to high level folks from Wells Fargo, Citi Mortgage,JP Morgan Chase,HSBC, etc. Paulson wanted to make it clear that his economy was doing juuuuuuuust fine until all these lenders messed with it.
So no surprise, we get a little tit for tat. One of our trusty CNBC producers caught Mozilo on his way out of the meeting, and he told her: “It's a matter of where the economy is going to go. Real estate values clearly caused most of the problem. Certainly lending practices, but real estate values has exacerbated the problem. Depending on how the economy goes and real estate value goes.”
Ok, so it’s the fact that the economy was so good that pumped up those real estate values, and it had nothing to do with all those lenders and those nifty new mortgage products. Like I said, tit for tat. You slap my wrist, I slap yours and everyone goes home happy...except maybe the homeowner. Really boys.
FYI: I'm out of the office on Thursday, but back on Friday. See you then.
Questions? Comments? RealtyCheck@cnbc.com