Good God! The number of emotional, knee-jerk screeching monkeys in this thread are embarrassing! The Treasury is not going to pay 100 cents on the dollar for these loans. They will pay according to the quality. THE ISSUE AT HAND, BEING SOLVED, IS GETTING CAPITAL FLOWING AGAIN IN THE CAPITAL MARKETS. The institutions will be selling these bad loans to the FED/Treasury at a discounted price. I agree with Rupert Murdock that this might not wind up costing the US taxpayer anything in the long run.
Unbridled panic & hyperbole rule the day!
Pass the Valium please.
If the opportunity to make money on these depressed assets is so great, then why don't cash rich players with long investment horizons, like sovereign wealth funds, university endowment funds, and the Buffetts of the world, swoop down and buy these up? Is Federal Government better at assessing these assets than the professionals?
The capital will get going again when the holders of mortgage backed assets lower the price to market clearing prices. E*Trade sold their portfolio for about 30 cents on the dollar late last year. Indymac sold theirs for 20-45 cents on the dollar in June. Other players will purchase these bonds, but the prices have to be low enough to compensate for risk. So far, banks have been unwilling to do so, because they've been valuing the debt way above market value in order to maintain capital ratios.
The only way for the government's plan to actually "save" the banks is for them to buy the assets at well above market value. And that's unlikely to be profitable for taxpayers.
How many cents on the dollar will they pay?
Nice try. On another thread, where it said the Feds would try to set the value of the assets based on market conditions, a poster went off screaming that the fed was going to “set values” for stuff, and claimed it was wage and price controls all over.
Stupidest thing ever said on FR.
Congrats.