A successful bailout? Watch lending between banks

Yahoo AP ^ | Sun Sep 28, 3:20 PM ET | JEANNINE AVERSA, AP Economics Writer

[Ernest_at_the_Beach]

WASHINGTON - The New Deal it is not. The government's biggest economic bailout since the Great Depression is aimed not at relieving unemployment or reforming questionable business practices, but at resuscitating financial markets debilitated by lousy bets on the housing market.

[Ernest_at_the_Beach]

Correction of link:

Congress reaches outline of bailout bill deal

[justa-hairyape]

Great. So the banks can now loan each other money. Big Wahoo. All this hype about economic doom, if the bailout is not passed, has assured that the economy will tank. Who in their right mind would want to borrow money in this kind of atmosphere ? Probably only the banks and businesses that are insolvent in the first place. So our good money goes into bad enterprises which in the long run guarantees a greater crash and a slower recovery. Assuming a recovery of the US Federal Banking system will even be possible after this crash.

[narses]

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Obama Says A Baby Is A Punishment

Obama: “If they make a mistake, I don’t want them punished with a baby.”

[narses]

Vogt early, Vogt often.

[Ernest_at_the_Beach]

I don’t believe the money will be buying shares of banks.

[ladyjane]

This bill is a compromise among theives

Some bigger thieves than others but thieves nonetheless. All of them!!

[justa-hairyape]

So the banks don't have to pay back the loans ? If a bank fails, the loan fails.

[Tempest]

Yeah thank God we have all the politicians to help rescue the the wall street fat cats from the problems they created and to ignore the rest of us unknowing pissants...

[Ernest_at_the_Beach]

Related thread:

Breaking: Details on the Economic Rescue Legislation (No ACORN Money!!)

[SierraWasp]

"Give us a tax refund of our $700B instead of a lender bailout and there won’t be a recession."

Perfect!!! Go to the head of the class!!!

[MHGinTN]

Bawney Fwank assure the television audience this evening that the congress owuld address those issues after the elections. Aren’t you just so encouraged?

[Ernest_at_the_Beach]

I’m checking out for a bit,...back to the Football game,...be back later.

[SierraWasp]

Hold it!!! You din’t say “Mother may I!!!” (grin)

[justa-hairyape]

Just to follow up on my point, I am breaking for dinner myself, the US taxpayer is buying toxic assets from banks. This is being done to save the banks and the federal financial credit system. Another way to look at this is that the US taxpayer is not making a purchase, we are making an investment or a loan to the banks that are currently holding the toxic assets. What do we expect to get back from this investment or loan ? We expect the banks to eventually become solvent again and repair the broken financial credit system. If the banks still end up failing due to bank runs caused by all the doom and gloom utilized to pass this bailout plan, the banks will still fail. In other words, our investment and our loan, fails. Then we end up hoping to get at least a few pennies back on the dollars we spent on the toxic assets of the now failed banks. But what would they be worth at that point ?

[BIGLOOK]

Reading this I find the sense of the problem.......but the problem is being corrected by buy outs within the private sector. It hasn't approached the $700 billion level yet but will it ever if the government comes to the rescue?

The majority of banks are stable, the majority of loans secure. It seems the problem (info from my broker) is concentrated in the area of Southern California, Arizona, Las Vegas and a few other areas. $700 billion could buy those areas lock, stock and barrel.

[Paraclete]

Good point. It’s now arguable the so-called “resolution” of the Savings and Loan problem in the 80’s just helped lay the groundwork for where we are now.

[justa-hairyape]

The majority of banks are stable, the majority of loans secure. It seems the problem (info from my broker) is concentrated in the area of Southern California, Arizona, Las Vegas and a few other areas. $700 billion could buy those areas lock, stock and barrel.

My take is that the 700 Billion is just needed to replace the bank run losses. The latest figure I heard is that the US expects 800 billion in bank runs by the end of the year. Those numbers appear to be somewhat similar. The toxic assets are really not the point now. If you cannot put a value on the asset, it is worthless unless it serves some utilitarian function.

[Gene Eric]

What would happen if the gov’t postponed the bill until the end of the week? And then again another handful of days? Would the market get impatient and find a way out on its own?

[Gene Eric]

>> If you cannot put a value on the asset, it is worthless unless it serves some utilitarian function

I bet they’re worth at least $1.

[Kickass Conservative]

Or as my wise Father once told me, “Things are only worth what people are willing to pay for them”.