Posted on 03/23/2009 10:35:54 PM PDT by Steelfish
Treasury's latest plan faces pitfalls Government seeks private partners, but taxpayers bear the risks
By John W. Schoen Senior producer msnbc.com March. 23, 2009
After months of speculation and false starts, the Treasury Monday announced a new plan to deal with the so-called "toxic assets" that have been weighing down the financial sector and clogging global credit markets.
The announcement by Treasury Secretary Tim Geithner was greeted by a big rally on Wall Street but leaves unresolved some major hurdles that have plagued the rescue plan since October, when the Bush administration first floated an idea to deal with the troubled assets.
And the new plan leaves unanswered the biggest question echoing from Wall Street to Main Street: Will it work?
With private investors still loath to step up and buy mortgage-backed securities and related assets, the latest Treasury plan shifts much of the risk to taxpayers.
By partnering with the government, a few big investment funds will have a chance to profit off the toxic assets, sharing any proceeds with the government.
But if the investments don't pay off, taxpayers will bear most of the risk.
“There is no doubt the government is taking risks,” Geithner told reporters. “You can’t solve a financial crisis without the government taking risks.”
In addition to the risk of taxpayer losses, there is also the risk that the government could set such a low price on the toxic assets that it could actually worsen the credit crunch.
(Excerpt) Read more at msnbc.msn.com ...
Let’s all join Tiny Tim’s chorus... Tip toe through the tulips... (c’mon! you can do better than that!! Strum that ukulele and git that falsetto a whole lot higher!!!)
Alternate title - "Amateur hour engages in more fun and games!"
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