[Fee]

Private public funding of hedge funds to leverage money to buy toxic assets. If economy recovers, hedge fund keeps all the profits, and if economy falters and the funds lose money, taxpayer eats the losses. Wall Street via politicians have hijacked Wash DC and made arrangements where only the taxpayers will be screwed when everything goes wrong again.

[CutePuppy]

Pols are enamored with pseudo public-private “partnerships” (aka Third Way) because it’s a no-lose game for them.

Heads - they win, tails - you lose. Handy scapegoats are usually on hand, and hardly any accountability as most recent experience with GSEs (Fannie, Freddie and others) has shown.

[JasonC]

No, the treasury invests in the equity right beside them, dollar for dollar, so it will receive as much upside as any of the partners. And all the incentive is, is that the FDIC will insure debt raised on this stuff as collateral. Guess what? If it stays in the banking system instead, the FDIC already does insure the debt that is carrying this stuff, because it is being carried by insured bank deposits and CDs, this instant.

Opening up that ability to the bond funds is a new incentive that can indeed get this stuff out of the banking system and into long term buy-and-hold hands. And the only risk the government is running in that, is one it is already running through its existing guarantees.

They simply know what they are doing, and everyone else is pretending the government can somehow get off the hook by blaming somebody else or letting somebody or other fail. They can't. Grok already, the treasury *already* owns all the downside. F. D. I. C.