That doesn't make any sense. The current bagholders have much more motivation to get rid of them. And since the US is the only buyer (unless they do set up an auction) then they have all the power to set price.
Take each asset, calculate fair value, apply 30-50% discount, and put in a limit bid. If someone wants to buy them, let them.
As noted in the article, there are plenty of private buyers for these toxic assets. The problem is that the buyers want to buy them at $0.10 on the dollar while the banks want to sell them at far above market value ($0.60 on the dollar).
While the current bagholders have much motivation to get rid of them, they won't sell them at market value because doing so would render many of them insolvent. (Many of them are marking these assets at $0.60 on the dollar on their balance sheets).
So the Treasury is planning to help out the banks by giving these banks what they want - ability to sell the assets at above market price. (which results in a transfer of losses from the banks to the taxpayers)
yeah not only are the banks licking their chops knowing they have a guaranteed buyer, they will likely go through other non-toxic stuff in their portfolio that has simply become inconvenient and pawn that off too
this is the wall st scam of our lifetimes. its just starting
Comments
That doesn't make any sense. The current bagholders have much more motivation to get rid of them. And since the US is the only buyer (unless they do set up an auction) then they have all the power to set price.
Take each asset, calculate fair value, apply 30-50% discount, and put in a limit bid. If someone wants to buy them, let them.
As noted in the article, there are plenty of private buyers for these toxic assets. The problem is that the buyers want to buy them at $0.10 on the dollar while the banks want to sell them at far above market value ($0.60 on the dollar).
While the current bagholders have much motivation to get rid of them, they won't sell them at market value because doing so would render many of them insolvent. (Many of them are marking these assets at $0.60 on the dollar on their balance sheets).
So the Treasury is planning to help out the banks by giving these banks what they want - ability to sell the assets at above market price. (which results in a transfer of losses from the banks to the taxpayers)
yeah not only are the banks licking their chops knowing they have a guaranteed buyer, they will likely go through other non-toxic stuff in their portfolio that has simply become inconvenient and pawn that off too
this is the wall st scam of our lifetimes. its just starting