In comments to congress today, Federal Reserve Chief Ben Bernanke said the subprime fallout could result in as much as $100,000,000,000.00 in losses for lenders. That is a lot of zeros.
During the hearing, Ben Bernake said the "Federal Reserve is taking measures to protect borrowers." Then congressmen aggressively questioned him about whether the measures to protect the borrowers were being taken quickly enough.
The question I have is:
Why isn't anyone talking about what can be done to help the lenders?
It is, after all, the lenders that will be incurring the $100 billion dollars in losses. I know there are some predatory lenders out there and I don't have a ton of sympathy for some of them. But, I also find it hard to sympathize with borrowers who got into more debt than they could afford at terms they didn't bother to read. In the end, some borrowers will end up having to find a more affordable place to live, but a lot of lenders and investors will be left holding an empty bag.
It will be interesting to watch and see whether any of the subprime loan fallout spills over into higher defaults on subprime loans on Prosper. If so, should we be asking what we can do to help those HR borrowers that can't make the payments on those loans?