Posted on 03/29/2009 7:59:57 AM PDT by arkadyka
Tim Geithner today was on Meet the Press selling to the public his plan to shore up the toxic assets and alleviate the bank's balance sheets. Right now the banks are crippled because they aer holding assets whose value nobody truly knows, some rough estimates suggest that the value of these mortgage based securities could be 50-70% lower than their original purchase price. At this point banks do not want to let go of these assets because they are partially hoping that prices will rebound and in part because they are waiting for government intervention. The latter is my speculative guess and their prudence certainly paid off given the Geithner plan.
(Excerpt) Read more at rkdpolitics.blogspot.com ...
This clown is winging it! An appointed tax cheat in charge at the Treasury Dept. given unconstitutional powers... Why do so many feeling we are headed for trouble?
There is one plan that will work.
Anyone truly buying a house gets a Capital Gain holiday for a set period of time-maybe five years.
Then, sit back and watch money come off the sidelines to purchase these properties.
TTTG-tax cheat’s plan will keep home prices at an inflated level, but those dollars will be worth a fraction of today’s value. This is the ultimate wealth re-distrubution scheme-those with wealth will be poorer, those with nothing will get stuff
Geithner is a tool of the marxists in the White House. He will be used for implementing as much hard marxism as can be forced on a stupid public, until the economic situation starts to improve. Then Geithner will be blamed for all that the public disliked, and will be sacrificed.
As long as the economic situation stays bad, obama will take advantage of it to implement his agenda.
Then there is this ALARMING FACT!
Bernanke Bombshell: AIG Insurer Exposed to FP
In researching and think about AIG, I have been writing about them as if it were two separate companies: A well regulated Insurer, and a rogue derivatives products firm (FP).
The working assumption has been that the regulated insurer was run fairly conservatively, and the structured financial product side run like a giant hedge fund. The 32% net profit retention on the FP side is actually better than what most hedge funds see.
This dichotomy is mostly true, but with now has an interesting twist to it. In congressional testimony today, Ben Bernanke implied that had the Fed allowed AIG too fall, he detailed what might have happened had AIG been allowed to fail:
The Federal Reserve and the Treasury agreed that AIG’s failure under the conditions then prevailing would have posed unacceptable risks for the global financial system and for our economy. Some of AIG’s insurance subsidiaries, which are among the largest in the United States and the world, would have likely been put into rehabilitation by their regulators, leaving policyholders facing considerable uncertainty about the status of their claims. State and local government entities that had lent more than $10 billion to AIG would have suffered losses. Workers whose 401(k) plans had purchased $40 billion of insurance from AIG against the risk that their stable value funds would decline in value would have seen that insurance disappear. In addition, AIG’s insurance subsidiaries had substantial derivatives exposures to AIG-FP that could have weakened them in the event of the parent company’s failure.
If we are to take Bernanke at face value, he is saying that AIGFP had buried their own firm with junk paper. BB does not define what “substantial derivative exposure” meant — but given the $2.7 trillion dollars in derivatives exposure that FP had, even a tiny percentage might amount to an enormous sum.
That the collapse of AIG Financial Products would have damaged the other Insurance half of the firm is a frightening development.
Most Frightening indeed but what is even more frightening is The Resident continues to give them and his other Contributors so much of your money! When he moved on UP he brought a lot of baggage with him!
Lori
Source:
Chairman Ben S. Bernanke on American International Group
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
March 24, 2009
http://www.federalreserve.gov/newsevents/testimony/bernanke20090324a.htm
http://bluelori.blogspot.com/2009/03/no-banker-left-behind.html
Check that last point. From Denninger:
The huge subsidy to banks hidden inside of Tim Geithner's public-private partnership program may already be leading banks to load up on securities they plan to sell at inflated prices.
According to the New York Post, Citi and Bank of America have been aggressively buying up Alt-A and ARM mortgage backed securities, sometimes paying more than the going rate of around 30 cents on the dollar.
Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.
There's nothing complicated about this at all.
Buy for 30 cents, sell to the PPIP for 50 cents, pocket a quick (and huge) profit immediately and nobody's the wiser.
And the band plays on.
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