Obama Plan for Bad Bank Assets Could Come This Week

The Obama administration's plan to purchase toxic assets from the banks in a public/private partnership could be made public as soon as this week, according to senior administration officials.
Officials said President Obama has largely signed off on the plan in discussions with Treasury Secretary Tim Geithner and the president's economic team. A meeting was scheduled today at the White House to discuus the plan. But some details of the so-called Public Private Investment Fund, or PPIF, had yet to be worked out and officials cautioned that could delay the announcement to the following week.

Still, officials say the broad outlines of the plan have been decided. Several competing funds will be established with capital from both public and private sources. The hope is to have these funds bid on the assets weighing down the balance sheets of the nation's banks and create a market price through the competition.

The administration plans to begin the program, to be overseen by the Treasury, the Federal Deposit Insurance Corporation and the Federal Reserve, with purchases of up to $500 billion in assets. It could be expanded to $1 trillion.

http://www.cnbc.com/id/29705616

 

Ya know, I'm just curious, but at this point would it not have been cheaper just to let all of these banks fail AND pay out unemployment insurance to EVERYONE who lost a job because of the failures -- at their original salaries?

Not that I would really support the above, but this bad asset/bank bank idea is just fucking insane! I have no better way to describe -- it is just 100% insane....

 

Let me take a wild guess ..............

A couple of partnerships (private) bid up a tranche of toxic assets.
A third fund (public) jumps into the auction with a fresh bid which is meet by the private funds with a wall of silence.

And the winning bid goes to ...... you guessed it ......the good old US tax payer.

Hang on a minute, I think that I have heard this tune before ..... cards, RE auctions, yacht auctions.

It is all so familiar.

regards
f9

 

Anything but wipe out shareholders. They don't want to nationalize the banks. Another stupid idea.

 

I'm starting my First Internet Bank of the Globe pretty soon. Franchisees will pony up a million and then lend thirty million to their local police and politicians. When the regulators come after them nobody will stick up for the regulators and I will provide franchisees a team of experts to run the regulators out of town. We might have to denominate loans in "Fractals" an as yet unheard of currency that will be accepted quite a few places... stay tuned for more breaking news...

 

The toxic asset plan is almost here?! Hooray!! The banks are saved!!

Wait...... why are ABX indices plummetting to new lows??

you figure it out.

 

But what are we looking for in this plan that will help us trade it? I know, 'Buy the Rumor, Sell the News'!

But what if the incentives that the Administration is offering, (i.e. Loans etc.) to the Vulchers and Hedge Funds is extremely enticing? What if the exchange mechanism they implement provides good transparency and a straight forward platform for trading them? What if the current value of these things is already marked so low, that a reasonable bid, acceptable to all parties can be found?

Look, I’m as suspicious as anyone that they really don’t have this thing figured out. Odds are that we’re headed for a Geitner II sell off. And if he doesn’t deliver this time, it ‘ll be worse than before because everyone will be running around wondering, “What now???” “What Now!!!”

But personally, I'm unclear just what I want to hear from the guy that would actually provide hope and optimism ... and thus make me consider going Long for a trade ... Anyone???

 

Quote from Cdntrader:

Wait...... why are ABX indices plummetting to new lows??

going to have to dig holes so they can go negative

 

If Obama/Geitner follow the Bush/Paulson playbook, they will time this with Options Friday.