R.A.M.B.O.s. to the rescue; Stop dancing around the unavoidable problem and the MUSIC of the Fed...

R - Residential Real property

A - Asset

M - Mega

B - Bond

O - Omnibus

S - Securities

The Fed, FDIC, US Treasury, Fannie, Freddie, Ginnie, FHLB, FHA, any state mortgage or housing finance authority issues are eligible too. Banks, Insurance companies including Monolines, and all private institutional mortgage market parties should consider the merits of RAMBOs. It's envisioned comprehensive basket security. An unleveraged public private vehicle, tax - enhanced LONG term vessel designed to hold effective good title for all mortgages and derivatives. The IRS temporarily suspends recognition of gain/loss, the FASB/SEC grants special balance sheet, but ring fenced capital treatment. Ratings agencies are increased to as many as 50. To encourage participation, during an initial limited window period assets may be transferred into RAMBOs at 100% of independent 3rd party valuation, 2 more later windows are envisioned however transfers are subject to haircut of 5% then 10% from the lower of initial and current independent 3rd party valuations.

Investors initial interests are valued proportionately. Public customers get priority and preferred pricing on the IPO of RAMBOs. RAMBOs will issue straight debt, preferred and common equity. Options on RAMBOs will be available.

1-RAMBOS allows the Fed to exit certain inappropriate markets.

2- Allows the swift, necessary wind down, and the end of the "Agencies",

3- Allows assets to return to public "markets" hands,

4-Returns the management of risk assets to professional NON conflicted investors.

5-With the Fed and the Agencies (the political/legislative factors now out of the picture) is hoped to reduce uncertainty, simplify private investors' evaluation, facilitate flow of risk capital, tax enhancements encourage longer holding periods - 7 years

6- Prohibited - Securitization, stripping, or any/all creation of derivatives, pledging, hypothecation or rehypothecation of RAMBos assets; a/k/a the no mini RAMBOs rule.

7-Sends a strong signal to global investors that we have "Capitalist aka Market" plan; open to market daylight.

8-RAMBOs success can be ported to create CRAMBOs for Commercial Real Estate related assets and derivatives.

Clearly there are more issues to consider in any eventual term sheet; but nearly anything is preferred to the Fed's, though well-intentioned, near lethal certainly dangerous masquerades.