[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.

[A.Hun]

Good post as usual, but I’ve got a couple of questions.

Is there any equitable way to price these assets? As the overall economy still continues to tank, won’t these sub prime based assets continue to lose value as foreclosures and real estate deflation continue?

Is this program large enough in scope to make a difference? Most estimates I have seen put the toxic assets in the 4-5 trillion range...this program is in the 1 trillion range.

I guess my real question is this....is this a fix or just kicking the can down the road?