Doubts mount over US toxic asset plan

FT ^ | 06/07/09 | Krishna Guha and Edward Luce and Saskia Scholtes

[TigerLikesRooster]

Doubts mount over US toxic asset plan

By Krishna Guha and Edward Luce in Washington and Saskia Scholtes in New York

Published: June 7 2009 22:24 | Last updated: June 7 2009 22:24

The controversial US toxic asset clean-up plan, aimed at clearing bad loans from US banks’ books to enable them to raise capital and lend freely, has fallen behind schedule, and may never be fully implemented.

The plan has fallen prey to concerns from potential investors and regulators and waning interest from the banks themselves. Investors fear that Congress may set caps on pay while regulators are beginning to doubt whether the plan is really necessary.

Last week, the Federal Deposit Insurance Corporation, which was supposed to provide finance for investors to purchase bubble-era bank loans, postponed plans for a pilot sale, saying it was less urgent than had been thought.

[TigerLikesRooster]

This is stating the obvious. On the other hand, FT has been clinging to hopes that somehow we will get out of this with dumping massive amount of money and credit into economy. They are also part of the mindless herd, from which they now consider straying away.

I also remember they were so excited about Zero making things go away somehow. Exactly how? These people amaze me.

[TigerLikesRooster]

Ping!

[my small voice]

Hey...He “organized” poor communities in Chicago....what makes you think he can’t handle the largest economy in the history of Earth? He was a senator for, what, a year?....yeah, he can handle it with that vast experience!

Good job Liberal Morons!!!!

[givemELL]

Why do they not just admit that there is enough official, unaudited, undeclared bank debt to take the dollar to zero? The credit derivative and national debts are all published by multiple sources. The spectacle is unprecedented and far surpasses the ‘29 and on period for scope and consequence.

[bruinbirdman]

I have not seen a difinitive analysis from the Treasury Dept concerning the swaps.

Virtually all these instruments had insurance, even if it were with AIG. There is still an AIG. If a mortgage instrument falls below a certain default rate, there is a claim on the property by the insurer at the going rate, which is zero. But that would only be if the owner wants to make a claim with the insurer.

I have not read a story that any of this has gone to court.

It appears that Treasury is trying to broker deals behind the scenes. Secretly doing away with mark to market while arbitrarily deciding who stays in business.Kinda like they are in denial and hoping the thing will go away.

Also looks like they are quietly breaking up CITI.

yitbos

[TigerLikesRooster]

They punt problem from one quarter to another without real resolution. Just keep rehashing and repackage them.

The typical behavior of folks facing problems too big to handle. However, by doing so, they do get the benefit of seeing green shoots we don't.:-)

[bruinbirdman]

"The typical behavior of folks facing problems too big to handle."

That sums it up better than I have seen. Agreed. Spooky.

yitbos

[bruinbirdman]

"The typical behavior of folks facing problems too big to handle."

If you read this FR article China Construction Bank may offer renminbi trade credit, and then the Bloomberg link, I would sum that up as, "It appears the world currencies are all about to devalue at the same time or reasonably close."

yitbos

[TigerLikesRooster]

Yes, all major currencies are devaluing. Just about everybody is increasing money supply. Of course, U.S. is way out at the front of the pack.

[John Leland 1789]

[RSmithOpt]

With U3 total unemployment around 7 million and U6 total unemployment around 14 million, when the economy does turn around (or at least quits deflating, people may realize that misuse of plastic is a curse.

[50sDad]

My plan to solve the crisis, written the day I first heard about it, long before the Obama plan:

1) Take a bazillion dollars and plow it into a Manhatten Project for fusion energy. Get every physisist in America and put them in Iron Mountain with unlimited resources and they don't get to go home until we have cheap energy. Once we have it, we give it to every semi-friendly democracy that uses oil on the planet, and tell the Muslims to go to hell with their pederast founder.

2) The mortgage companies are now tax free, and get to lower their rates to what they were before the sub-prime cranked up to prime and every body went broke.

3) We slash the budget of pork until we make back the money from #1 and #2.

4) If we have gained enough political capital by the end of this, we kill all the lawyers. And the ACLU. Slowly.

Who's with me?

[Diana in Wisconsin]

Oh, Goody! USA Banks = Superfund Sites!

(Which STILL haven’t been cleaned up since the inception of THAT boondoggle way back when...but they sure have thrown a lot of money at it!)

http://www.epa.gov/superfund/sites/index.htm

[GOPJ]

The Federal Reserve – which was to provide loans to investors to buy bubble-era securities – has only confirmed it will finance bubble-era commercial mortgage-backed securities. But it has run into problems on securities backed by residential mortgages where the value of the underlying loans is difficult to measure.

"Difficult to measure" - is that the new euphemism for worthless?