Posted on 09/21/2008 8:32:53 AM PDT by Flavius
Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.
"Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said on ABC television's "This Week with George Stephanopolous."
(Excerpt) Read more at news.yahoo.com ...
That says absolutely nothing.
Just in case you haven’t seen it. Here is a thread on Newt’s proposal. The posts are not interesting but the Newt’s comments are.
http://www.freerepublic.com/focus/f-news/2087228/posts
I need to know which of the words you did not understand, so I can help you.
LOL- Thanks! I posted this before and pinged you to it:)
http://www.freerepublic.com/focus/f-news/2087218/posts
How many will they pay.
Simple question.
The same Freepers who have seen the border fence, offshore drilling, nuke plants, refineries, etc., get tied up for years and years by lawsuits and lawyers, all of a sudden GET STUPID as to what would happen if that was allowed in this scenario....
You don't want oversight when you throw away hundreds of trillions of dollars on bad investments.
Do you really mean "many", as in how many loans will they buy, or your original question which was "how much", as in how much will they pay for each loan?
I'll assume the first question. Well lucky for you, Paulson just called me on the phone and I asked him. He said "Tell that person to give me the property address and my team will cost it out and also decide if we want to buy it"...
Actually that didn't happen so I'll have to state what I originally posted and stick with it until Paulson returns my call. They will bid for each batch of loan packages, according to the average quality, i.e. how many mortgages in default, how many mortgages that are behind, loan-to-value, and on and on.
And #146 goes for you to.
As the credit crisis has unfolded, banks have been moving their assets into the level 3 category.
Merrill Lynch for example:
Merrill Says Level 3 Assets Jump 70% in First Quarter (Update3) By Joyce Moullakis May 6 2008 (Bloomberg) -- Merrill Lynch & Co. said so-called Level 3 assets climbed 70 percent in the first quarter, as the largest U.S. brokerage reclassified commercial mortgages and other assets as hard to value. Merrill's Level 3 assets, the firm's most difficult to value, rose to $82.4 billion as of March 28 from $48.6 billion at the end of December, according to a regulatory filing today. The New York-based company's ratio of Level 3 to total assets rose to 8 percent from 5 percent.
While many subprime-related assets that lost almost 100 percent of their value since July were categorized in Level 3, other holdings such as private-equity stakes, real estate and rarely traded corporate debt are also included because market prices for them aren't available.
How about Goldman
Goldman:Aug level 3 asset value $72.05B, 7% of total Last update: 10:57 a.m. EDT Oct. 10, 2007 By Bhattiprolu Murti Of DOW JONES NEWSWIRES Goldman Sachs Group Inc. (GS: 129.80, +21.80, +20.2%) said Wednesday the size of its level 3 assets at the end of third quarter increased to $72.05 billion from $54 billion at the end of the second quarter. In terms of percentage, the New York-based investment bank's third-quarter level 3 assets amounted to 7% of the total assets, compared with about 6% at the end of the second quarter. Level 3 assets are those that trade so infrequently that there is virtually no reliable market price for them, and valuations for these assets are based on management assumptions. The credit crisis has sparked concerns about the value of some of the assets investment banks hold on their balance sheets. Investors and analysts have been especially worried about banks' exposure to turmoil in the mortgage market and recent trouble in the financing of big leveraged buyouts.
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The problem affecting the broker dealers and money center banks is that starting in q1 2009 They will required to mark to market all their level 3 assets
My point is that much of these "toxic assets" can not be marked to market because the asset backing of these securities has vanished.
BZZZZT! The legislation allows him to pay anything he wants for any property he wants without oversight or consideration of value.
You couldn't be more wrong if you tried.
You don’t want oversight when you throw away hundreds of trillions of dollars on bad investments.
I don’t understand much of it, but I’ve read enough to know that there is truly a possibility that the treasury could actually benefit from this if the government can turn it around.
I’m all for limited government, too, but there is a time and a place for the feds to jump in. “Ensure domestic tranquillity,” and “promote the general welfare,” as stated in the preamble, applies in this case.
You are spouting gross, emotional, ranting, ignorance.
Paulson is a very bright man. He’s not you!
Level 3 assets are marked to market.
http://www.fasb.org/pdf/aop_FAS157.pdf
The issue is that the valuation is more judgemental because of the “unobservable inputs.” You are correct by saying market value is hard to determine. By establishing a market of 30 cents on the dollar, the government will provide a floor. This is intended to unfreeze the market.
You're in a panic, without facts to support you.
Paulson is a very bright man.
Let's make him king!
Does the legislation subject Paulsen’s expenditures to the “FASB Statement of Standards”?
I'll put it to you another way: Not with my goddamn money!
The FASB authoritative accounting body for companies. This particular pronouncements shows that companies are required to carry these mortgage securities at market value. It is these valuations that will be the basis for how much Paulson will be pays when he says he is paying “current market value.”
I understand your concern about “the Secretary’s insistence that no agency or court of law ever be allowed to review to whom or how much he pays for these so called assets.” That is a legitimate topic of discussion by Congress.
As for the 30 cents on the dollar, I am using it since it is frequently stated by those discussing this matter. Another figure being discussed is 20 cents on the dollar.
To me the exact figure, while very much relevant to the actual transaction, is not relevant to this discussion. We will know the exact value soon enough. 20 cents, 30 cents, what is the difference? The point is to recognize that this is quite a haircut from the original price of 100 cents. Given that the government acquires the asset (mortgage or real estate in the event of default), at some point there has to be value there.
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