Obama Seeks Investors in Plan to Buy Illiquid Assets

[Joanne98]

Source: Bloomberg


March 23 (Bloomberg) -- The Obama administration will announce details of a plan today to expand the $700 billion rescue of the financial system that will rely on enticing private investors to buy the troubled assets clogging banks’ balance sheets.

Treasury Secretary Timothy Geithner, who will unveil the Public Private Investment Program today, has crafted an approach using up to $100 billion of bailout money to spur investment funds to purchase -- and banks to unload -- the illiquid securities and loans that have caused credit to dry up. The Treasury, Federal Reserve and the Federal Deposit Insurance Corp. will all play a role alongside private investors in aiming to buy between $500 billion and $1 trillion of troubled assets.

“By providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets,” Geithner said in an op-ed piece published in today’s Wall Street Journal. “The ability to sell assets to this fund will make it easier for banks to raise private capital.”



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aT16m2FlyQRs&refer=home

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I wonder who the private investors are going to be.

[OwnedByFerrets]

1. If they make money, they are good, if they lose money, we

bail them out. Its a win win for those RICH investors. Its not so clear cut for the tax payer.

[RUMMYisFROSTED]

2. Small win/Big loss for tax payer. Small loss/Big Win for investors.

Jmho.

[PSPS]

3. Bye bye, Obama.

This will ruin his presidency.

Of course, there is no value to these "toxic assets." Nobody wants them. This "private investor" canard is just window dressing. The US taxpayer is the one who will "play a role alongside private investors." Translation: It's the american taxpayer who will really be "buying" them while, at the same time, paing these "private investors" a made-up "return" on their "investment."

This stinks to high haven.

[Marie26]

4. This is the plan? OMG.

So, basically, the USA becomes AIG. We'll insure those toxic assets, Wall St., don't you worry! Buy buy buy these risky, worthless assets for more than they're worth & we'll pay up full price when they (inevitably) default! Even if it means throwing trillions of dollars down an endless black hole! Do I have that right?

[Fiendish Thingy]

5. So who do we contact to protest this P.O.S. plan?

This is outside the legislative arena, right? So calling my rep/senator won't do any good...is change.gov the right place for us to voice our dissent? if not, where?

Dissolve AIG now, nationalize insolvent "too big to fail" banks now, tell CDS investors "too bad, so sad, but your dice came up snake eyes, you lose" and give them NOTHING. Once the banks are nationalized, they/the Govt. can start making loans to worthy borrowers again, bypassing the middlemen who want to skate through this crisis without losing a dime while we lose everything and the dollar gets devalued into nothing.

Then Holder should start putting the gamblers in jail.

[PM Martin]

6. Obama is going to be a "one term wonder" as they are called if

he goes forward with this plan.
The "toxic" assets are without any real value.
He is telling the working man that you will have to pay to bail out irresponsible investors.
Should any profit be made, it will go to the private investors and the tax payer still foots the bill.
I cannot believe this. This IS a Bush/McCain/Harper/Conservative plan! Why is he doing this?

[rcrush]

7. Stuff like this

Makes me think even more than our government was bought and sold years ago. We live in the Matrix.

[chimpymustgo]

8. "The Matrix is a system, Neo. That system is our enemy. "

"The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it. "

[rcrush]

9. That movie was smarter than people gave it credit for.

Its a shame they had to make those crappy sequels.

[hugo_from_TN]

10. CNBC had someone from PIMCO on this morning.

He said they were putting together an organization with the goal to buy a few hundred billion of these assets if the plan pans out as hoped.

[bemildred]

11. Why would any sane investor buy "toxic" assets?

Why are we still trying to pretend that all this bullshit was not really bullshit?

[apnu]

12. probably because at the very bottom of it, there are real assets on the line

namely homes. Take these broken sub-prime mortgages, and refinance them into something with a sensible interest rate and there's a steady influx of revenue. Plus people get back to work, the economy recovers and whee! things are back on track.

Or, if the people who took the mortgage can't handle that, then at least the physical homes have some value.

There can be a way out of this, its that easy. However, and maybe I don't understand this problem, it seems to me people aren't talking about making these toxic assets "clean" again. I just hear talk about "buying" the toxic assets and then.... (insert endless hanging on a thread sound here). Nobody seems to have an idea what to do. "We" (the tax payer) bought banks and insurance companies, so we've got the institutions (and the bad assets) to do something.

Maybe I don't get that part at all.

[high density]

13. Well they're only perhaps 40% bullshit at the moment

The idea is that the Feds insure the investors a bit against losses and then shares a bit in the profits. Then the banks are supposed to start lending money again once the toxic "assets" are off of their balance sheets.

[bemildred]

14. So it's blackmail?

Cough up or we won't lend money? If the government wants money lent, why not just lend the money? Why do we need these incompetent plungers to lend money, especially if they don't want to lend money any more? Is lending money some sort of difficult operation? :sarcasm:

I just don't see what we need these losers in the middle of things for.