What if they held a PPIP auction and no one came?

[girl gone mad]

What If No One Came?
Posted by Equity Private, Mar 26, 2009, 5:07pm
http://dealbreaker.com/2009/03/what-if-no-one-came.php">Dealbreaker

It strikes us that the PPIP plan requires a certain faith by the administration. Specifically, that balance sheets are not actually so underwater that even a 30% subsidy is a hollow gesture. What's more, how sure is the administration that actual price discovery is something that any of these institutions actually want? Clearly, given the seller-financing leverage shell-game baked into the plan, the hope is that bids will buoy up. The problem, however, was perfectly highlighted on today's FDIC call (http://dealbreaker.com/2009/03/conference-call-with-team-sheb.php">transcript).

What, a banker effectively asked, if his participation were to "blow a hole in the capital?" Would capital requirements be waived or adjusted to keep the institution from running afoul? (Probably not). The meaning was somewhat veiled, but the broader implication was that actual price discovery would so impact the balance sheet and impact equity capital so negatively as to reveal this particular institution to be liver sausage.

What about bids or asks that resulted in no actual transaction? Would they, one voice trembled, constitute... (gulp, deep breath)... pricing data sufficient to trigger mark-to-market treatment? (Could be!)

As if on cue, another questioner wondered if the FDIC could force participation. (Probably not). You could almost feel the exhale of held breath.

Would participation exempt an institution from special examination? (Laughter). No exhale on this one.

Could it be that the biggest problem confronting the nation isn't that Goldman Sachs might make money buying assets in the PPIP because Tim "The Safecracker" Geithner is in league with the devil? What if almost no one participated at all? One side of us thinks that we are reading too much into all this. Another thinks that if you can read between the lines you can almost hear the cracks widening.

[Teaser]

1. That contingency tells Obama et al. exactly what they need to do with nonparticipants

and is likely part of the plan.

[MarjorieG]

2. These aren't known asset values, so we really need eachother on this.

Then we re-regulate.

[thevoiceofreason]

3. About the same probablility as monkeys flying out of your ass

Reminds me of the absurd hypotheticals in 1L. Let's come up with something else to fret about.

Get a hobby. You've made your position clear regarding the plan. No need to constantly post new outrages.

[marketcrazy1]

4. I just read the transcript

if that was real........ we are SO fucked!! LOL!!! they have NO IDEA what the hell they are doing!!!

[girl gone mad]

5. Potential lack of participation in the PPIP is a valid concern...

that's been expressed by a number of top economists.

If you have nothing more to contribute to the discussion than a hollow dismissal and a childish demand that I shut up and go away, why even bother?

[marketcrazy1]

6. girl gone mad keep posting these articles

people need to WAKE THE FUCK UP!! I very much appreciate your efforts to keep us informed........

[girl gone mad]

7. Thanks.

I have to read all of this stuff anyhow as part of my work and it takes very little effort for me to post the articles I find interesting over here so I don't plan on stopping any time soon.

[marketcrazy1]

8. what is your work?

if I may ask, I have been following this situation in detail since august of 07. I hesitate to post all that I have learned, many seem unwilling or unable to deal with the facts.........

[pa28]

9. .

:thumbsup:

[FlyingTiger]

10. Agreed. The government is SUPPOSED to be questioned.

I can point to a particular old document that says so.

If it has good answers, then there's no problem. If it doesn't, then the people should know.