Okay (forgive my ignorance) isn't this plan like the one used for the S&L's in the 80's

[underpants]

I have done some reading but I am having a hard time finding a good summary of the plan.

I understand that Krugman is critical of the plan saying that the model already exists for this kind of crisis--namely the one that was used (at great taxpayer expense) for the "Thrift" crisis in the 80's. From what I understand that was "solved" by the Feds backing assets at a new lower rate and private investors picked up these assets (at reduced price) and ended up making money off of them.

Is that NOT what the plan is now?

---

From what I understand the plan also has increased (or some in the case of the hedgefunds) regulation but falls short of separating the commercial operations of banks from their investment side. And the insurance company/bank houses are not going to be split up either.

I have read that this is actually a Federal hedgefund of sorts too.

:shrug:

any help will be greatly appreciated.

[jody]

1. Sh! You aren't supposed to wake that sleeping dog that cost $700 billion & enriched the Bush family.

[shadowknows69]

2. Battlestar Galactica fan by any chance?

"All this has happened before, and it will happen again"

[customerserviceguy]

3. The only thing that made the S & L plan work

was the fact that real estate prices did not decline as significantly as they have done recently. Also, it wasn't terribly long before prices got back up to the 1979 bubble levels.

I bought a house that year, and by the time of my divorce in 1984, it wasn't worth much more than the amount of the mortgage on it (we had a negative amortization loan, but that's another story), so I didn't ask for any lien for my "equity" on it in the settlement. It was pretty obvious that any equity that would be generated in the house would be from my ex making the payments on the place.

Fast forward a decade, and the place sold for more than twice what we paid for it back in '79.

We have no idea when the bottom will come in the current real estate market. There are signs that it might be turning around (when you look at February sales figures), but that might just be because the first-time homebuyer credit was changing from being refundable to being non-refundable under the stimulus bill. We'll see what happens when March revised figures come out in a couple of months.