Back up a sec and look at who provided the leverage for the deal: We sucker taxpayers.
Starting from that point, now work your way through a “margin call” for these assets if the default rate goes to a point where all the money the “private investors” put into the deal is consumed by mark-to-reality accounting of dubious loans and irrecoverable debt.
When you do, what you see is this: the “private sector” gets a big piece of the upside, and we taxpayers are holding the bag on the downside, UNLESS the details of the agreement allow for what would effectively be a “margin call” demanding that the investors put up more cash to hold onto their position.
I seriously doubt that such a clause is going to be enforced on these investors...
If I could get a deal like this, heck, I’d buy some of this crap paper. But there’s no way the FDIC is going to offer a guy like me who asks protologically annoying questions about bank balance sheets and loan terms to play in their game.
This degree of leverage is being offered by a rogue goobermint that happens also to be the most thoroughly economically illiterate goobermint since (at least) the Hoover administration, perhaps the most thoroughly illiterate forever. The taxpayers have precisely zero say in the matter.
“If I could get a deal like this, heck, I’d buy some of this crap paper. But there’s no way the FDIC is going to offer a guy like me who asks protologically annoying questions about bank balance sheets and loan terms to play in their game.”
I could put together millions for this scam, but this is a closed shop, only cronies need apply.