FDIC Publishes Public Comments On The Legacy Loan Program (PPIP)

[girl gone mad]

The FDIC solicited comments on the Legacy Loan program. They've just posted the http://www.fdic.gov/llp/LLPcomments.html">responses on their web site.

I think Ben Dover speaks for most of us:

From: Benjamin N. Dover III
Sent: Sunday, April 05, 2009 3:48 PM
To: LLPComments
Subject: Legacy Loans Program

Ms. Bair:

I'm confident that I speak for most Americans when I note that the proposed PPIP
is grossly unfair to the banks, investors and asset managers. This sweetheart deal for
taxpayers would penalize banks for finding themselves in an unforeseeable
predicament for which they bear no responsibility. It would also require selfless
investors and asset managers to bear an unconscionable portion of the risk in return for
minimal reward. If we're going to get through this crisis, everyone's going to have pitch
in and sacrifice -- and that includes the taxpayer.

So, unless you want the global financial system to be Lehmaned again, I suggest you
change the terms of the program as follows:

1. Given that the underlying loans are sound, performing and cash flow positive, they
should be priced at the banks' "mark-to-model" valuations plus, of course, a premium in
order to induce the banks to make the sacrifice of parting with these valuable legacies. I
suggest that market-driven price discovery occur in a range of 120-140% of par
depending on the specific assets at issue.

2. The Government would put up 100% of the capital plus 100-1 leverage in the form of
non-recourse financing funded by a combination of the FDIC fund for deposit protection
and the Social Security endowment. (Medicare and Medicaid could also be asked to chip
in as necessary -- I see no reason why the poor and elderly should not pay their fair share
here).

3. Once bought, these assets would then be gifted to large hedge funds and private equity
firms. In order to properly allocate risk, they would be forced to accept 100% of any
profit and 0% of any loss. (And remember: hold your ground if the investors try to
haggle over this.)

4. A small number of asset managers should be selected in secret to manage the assets in
return for guaranteed fees to be paid by the Government. Typically, hedge funds are paid
2% of the value of the assets under management plus 20% any gains. That seems fair
here. Because investors will be entitled to 100% of any gains, the Government will need
to come up with the extra 20% for the asset managers. (I suggest diminishing handouts
to socialist programs like Head Start and AIDS-research organizations.)

5. Obviously, you'll need to guarantee all parties that in exchange for rescuing the
taxpayer they won't be subject to any Government meddling before, during or after the
transactions are completed. I suggest you lobby Congress to pass a law prohibiting it and
all regulators (you too, Ms. Bair) from engaging in any interference or exercising any
oversight over the program or the parties involved. In addition, Congress should grant a
pre-emptive amnesty and pardon to all parties for any wrongdoing that they later may be
unfairly accused of in connection with the program. (Remember, contrary to what certain
populist muckrakers may claim, "gaming the system" is just another word for "nothing to
lose".) I hope it goes without saying that none of the fees or profits resulting from the
PPIP should be subject to any ordinary (much less special) taxes.

Finally, I think it would be appropriate for you, Mr. Geithner and Mr. Bernanke to send
letters of gratitude to all parties involved for their generous effort to bail out the
American taxpayer. Their magnanimity, propriety and responsible leadership during this
crisis should be examples to every American.

Benjamin N. Dover III
[e-mail]

[marketcrazy1]

1. PRICELESS!! ( sort of like the "assets" ) LOL!!!

that was great...... comments link is not working????

[girl gone mad]

2. Oops!

There was an extra space in the URL. It should work now. It's really worth reading through them, there are several good ones, some from notable firms (wonder if they realized these were going to be published?).

[noiretextatique]

3. this is one is straight, no chaser

Sent: Thursday, March 26, 2009 6:18 PM

After reading the plan, it is my opinion that it is a handout to the corrupt bankers who put America
into this position. It would be better off to send each American a check for $50,000 then to reward
the crooks for making bad/illegal loans. It appears as if they taxpayers are taking at least 90% of
the risk. Or, better yet, it is being transferred to them. I see people everyday who never should
have been given loans. The amount of fraud has to be in the trillions. Therefore, instead of
allowing the banks to go bankrupt, we are going to bid the assets up in value. You can already
see the banks in buying the ALT A garbage in anticipation that they can sell this garbage back to
the government for a profit. I practice bankruptcy law. I can tell you, people cannot take on
anymore debt. So, trying to push on a string is not going to work. The taxpayers are going to be
stuck with bad assets and the bankers, as usual, along with their political friends, will run off with
the printed dollar bills.
It is mathematically impossible for this plan to work. It would be better to allow the good banks to
buy the bad banks like we already do each Friday night. Fund the good banks to buy the bad
banks, and fire the bad banks management, like Goldman Sacs, Bank of America, etc. Then,
give big rebates to Americans to pay off their mortgages, this would flow DIRECTLY to the bottom
line of the banks and make their loans whole.
Lastly, put the criminals from AIG and the other banks who created all this fraud and sold it to the
world.
I will guarantee you this, the bailout buyout of bad loan plan will not work. Within 3 years, things
will implode worse then they are now.
Good luck
W. Murphy ESQ MBA
Stuart, Florida.