If the Treasury dept. agree to Bears Sterns turn in debt, would the home owners still own to pay envelope a mortgage?
Answers:
Yes. Any mortgage loans or CDOs owned by BS would go to creditors.
Yes, Accounting Principles dictate that a Company should act conservatively and cause a provision for possible bad debts in their preparation of financial statements. A debt is not impossible unless all efforts for collection prove to be futile, i.e. the debtor go bankrupt. Even when a bank cease to function, the fund providers to that bank continue the collection hard work since its partly their money that the borrower of the bank have been using.
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