"1. The money as I understand it does purchase bad loans. Those loans are not forgiven and provide in the long term an opportunity for the recovery of the funds. This is not a ridiculous prospect given that land values and property values are ultimately destined to rise in the US— even if they do suffer a temporary crash. This means that potentially, even the taxpayer could realize a return on this now terrible investment"Could well be wrong, but my understanding is that there is 'only' about 250 Billion in sub-prime loans, not all of which are even at risk of default. I've been led to believe the 700 Billion is to cover some of the credit default swap risks and keep certain institutions liquid and that this will involve a lot more risky and less collatoralized items for which there is no market value at all.