http://mrmortgage.ml-implode.com/2009/01/07/wamus-new-1-million-5-year-1-balloon-loan-878-per-month/ who are the chumps still paying 5-8% on their jumbos. Maybe this is the way to save the financials, just give everyone $1M leverage for $878 a month and we can trade our way out of this mess, just think of the commissions (never mind about the lossses we can deal with those in 5 years after we have all collected our fat bonuses). On a more serious note, if there was ever an example of why the intervention in the market has been misguided this is it. This guy made a very salient observation on the linked article: redeye Said: January 7th, 2009 12:27 pm I just want to add that the only thing that changed between the time the banks were reducing principal and today is TARP. Once the prospect of selling these loans to the government at far, far more than they are worth materialized, the principal reductions ended. Now the banks know that without principal reductions, foreclosures will keep climbing. And rising foreclosures will ensure the government will revisit TARP - the Troubled Asset Relief Program - under a new unsullied name. Then they can unload all these loans and let the government do modifications done right. The difference? When the bank does principal reductions, they take the loss. When the government does it, we do.