Treasury floats yet another no good, very bad plan to stick us with the banks 'toxic assets'

[girl gone mad]

Via the http://online.wsj.com/article/SB123603913648314649.html">Wall Street Journal, the Obama administration is revealing another iteration of the bad "bad bank" idea that just won't die. This new and improved version looks only slightly less egregious than previous plans which called for taxpayers to buy currently worthless securities for dollars on the penny. Now we will get to backstop private investors who want to join us on this fool's errand.

The Obama administration, filling in some of the blanks in its bank bailout, is considering creating multiple investment funds to purchase the bad loans and other distressed assets that lie at the heart of the financial crisis, according to people familiar with the matter.

The Obama team announced its intention to partner with the private sector to buy $500 billion to $1 trillion of distressed assets as part of its revamping of the $700 billion bank bailout last month. It's central to the administration's efforts to unglue credit markets, alongside a Federal Reserve program aimed at spurring consumer lending in areas such as credit cards and home loans that will be officially launched Tuesday.

No decision has been made on the final structure of what the administration is calling a private-public financing partnership, but one leading idea is to establish separate funds to be run by private investment managers. The managers would have to put up a certain amount of capital. Additional financing would come from the government, which would share in any profit or loss.

These private investment managers would run the funds, deciding which assets to buy and what prices to pay. The government would contribute money from the $700 billion bailout, with additional financing likely coming from the Federal Reserve and by selling government-backed debt. Other investors, such as pension funds, could also participate. To encourage participation, the government would try to minimize risk for private investors, possibly by offering non-recourse loans.

The public-private partnership grew out of the "bad bank" concept, an idea popular among some economists that would have required the government alone to buy up the troubled assets.

[libodem]

1. Let the 'private sector rules' party

buy up those toxic assets. If they were not completely toxic and going south the private sector and not the government would be buying them. Allow Rich Limpbaugh to buy the toxic worthless paper from the Holy Banks since he hates government and only want private enterprise and persons to do business. I'm rambling. But what was all the Naomi Klein money as debt instruction trying to teach us? Something about the bank moves the new mortgage loan into the 'I now have this much more money' column when it's nothing but ink. How many 'lost' assets are we paying for that never actually existed. I think there are still a lot of crooked Bush smoke and mirrors making policies.

[mshaf]

3. weird...

this is just weird... really...

Mina
Los Angeles Tailor

[Mr. Hyde]

2. You can always count on the American government to do the right thing

after they have exhausted every other option.

[leftofthedial]

4. Wall Street's man in the Treasury will make it so

socialize the risk
privatize the profit


gawd bless capitalizm

[marketcrazy1]

5. NON RECOURSE LOANS!!!!

MEAN TAXPAYERS EAT THE LOSSES!! while "private investors" skim ALL the profits!!! NICE!!!!!!!!!!!

[libodem]

6. So damn unfair

it is just not right.