Plan to Buy Toxic Bank Assets Delayed Again

[bijou]

The Administration's long-awaited plan to save America's banks is being delayed again, government sources tell Time. Fears of an AIG-like backlash among potential private investors, and the difficulty of creating a model to price toxic assets on the banks' balance sheets, have both contributed to the delay, the sources say.

The slip is embarrassing for Treasury officials who have been assuring the media and the markets that the plan was coming, first in mid-February, and as recently as March 14 when Treasury Secretary Tim Geithner told Bloomberg TV he would release details soon. A senior Treasury department official says the plan isn't slipping, but other government officials say it is and could be unveiled anywhere from next week to early April. (See TIME's top 25 people to blame for the financial crisis.)

Facing this latest delay, Administration officials are urging patience and insist they are moving more programs on more fronts faster than anyone has tried to do before. "People want a quick, clean, decisive resolution to this stuff, they want us to just fix it and have it be over with," says a senior Administration official. "We are moving in a relatively short period of time on a scale that I don't think you've ever seen an Administration do." ...

http://www.time.com/time/business/article/0,8599,1886729,00.html

[Black Swan]

The fix is LET THEM FAIL.  No more bailouts or programs.  Yes, it will hurt. Let the market correct itself after these fools made it possible for loans to be given away on the street corner to anyone who was still breathing.

[Peter3_1]

Much of the value of these supposed "toxic" assets can be restored by changing from Mark to Market to Mark to Value and it does not cost a penny.  But a recovering economy will not, he seems to think, help Mr. Obama switch to a socialist government. This is INTENTIONAL, folks, and many are buying his fraud.

[rich_t]

Much of the value of these supposed "toxic" assets can be restored by changing from Mark to Market to Mark to Value and it does not cost a penny.  But a recovering economy will not, he seems to think, help Mr. Obama switch to a socialist government. This is INTENTIONAL, folks, and many are buying his fraud.

In laymans terms could you explain that whole  "changing from Mark to Market to Mark to Value?"

Thanks.

[Black Swan]

In laymans terms could you explain that whole  "changing from Mark to Market to Mark to Value?"

Thanks.

I'll take a stab at it.  Mark to Market = what is the value of your house (asset) today.  Mark to Value is what is the value (in the future) you think you can get for your house.

I call it Mark to Magic or Mark to Fantasy.  So, I disagree with changing this rule.  As far as a program Geithner sets up I see the taxpayer getting hosed.  IMO, the institutions will not sell these toxic instruments for what they are worth (next to nothing) and the private sector will not pay what the institutions think they should get for them unless we the people subsidize this program with a guarantee of some sort.

I'm open to correction if someone thinks this is wrong. 

[rich_t]

I'll take a stab at it.  Mark to Market = what is the value of your house (asset) today.  Mark to Value is what is the value (in the future) you think you can get for your house.

I call it Mark to Magic or Mark to Fantasy.  So, I disagree with changing this rule.  As far as a program Geithner sets up I see the taxpayer getting hosed.  IMO, the institutions will not sell these toxic instruments for what they are worth (next to nothing) and the private sector will not pay what the institutions think they should get for them unless we the people subsidize this program with a guarantee of some sort.

I'm open to correction if someone thinks this is wrong. 

Ok, that is an explanation that I can get my mind around. 

Thanks.

[Peter3_1]

Actually, mark to value might be better describes as follows with reqalestate. The GROUND THAT MAKES UP THE LOT/PROPERTY HAS VALUE. eVEN IN THIS MARKET YOU can SELL a lot. Then the IMPROVEMENT has a corrent value todat. Today a 2"x4"x10' board has a value, just call your lumbeeryard and ask, the LABOR has a value today, just call a hanDi-guy to build a porch and say you want to pay materials cost plus labor and get his labor charge.

From this you DEDUCT depreciation. The bundled mortgages face the valuation problem the is NO ONE will buy them at ANY price, so they have NO VALUE in the Market, and facts are that these things DO have VALUE. In this market in YOU were a bank loan officer or a hedge fund operator would YOU spent YOUR companies money in the hundreds of millions of dollars on a risk like this. Certainly not.

So apprasing the assets at their VALUE in current real terms rather that a a panic market no valus takes a hugh part of the panic AWAY!

BTW, heard today that Turbo Tax Timmy is indeed negotiating with Pimco and otherson such a  basis. Timmmy wants to buy from the Banks at 5% of current appraised value, then transfer the assets to Pimco etal at 6% on credit. Then Pimco etal. may sell them and is expected to realize up to $100 for each $6 of costs.

SO, Turbo Tax Timmy /Obama Admin. intends to screw the Banks/hedge funds out of 95% of the value that changing the accounting method would show. That is, they are actively trying to break the banks. It is still more evidence that we are looking at a power grab not an attempt to repair the ecnomy.

As a matter of fact, up until the Carter Admin., and perhaps a little later, EVERY apprasial has TWO (2) seperate methods of apprasing done. ONE was Comprables , that is mark to market. The other (much more difficult, btw) was REPLACEMENT COST less appropriate depreciation, that was mark to value.

[rich_t]

Ok Peter,

What formula would you propose to use to reset to Mark to Value?

What would you reset it to?  Based on what criteria?

[Peter3_1]

Which assets are you refering to Rich? If you are refering to the bundled "credit default " mortgages, I would have them UNBUNDLED, THE BANKS KEEPING THE 90% THAT ARE performing assets, and have the bail out money we give to Freddy and Fanny buy the rest at 5%. I would state openly and withour equivacation that NO MORE MONEY would be handed out to ANYONE for bailouts even if Turbo Tim wound up selling apples on the corner.

The Banks would no longer be permitted to issue 100+% mortgages, but 10% payment by mortgagor on primary residences, 20% on secondary residences. The Appraisors would have to be at least two, Comps and Replacement , with the MAXIMUM value being an AVERAGE of the two. As for Freddy and Fanny, if Gvt. wanted these to still give 100% mortgages themselves, they would become 100% Government entities and would be setopped from guaranteeing ANY mortgage that was not loaned against both the apprasial requirement and a MEANS TEST.

BUNDLING WOULD STILL be permitted, BUT any financial institution buying such a bundle would be required to have the SAME RESERVES as if they had issued the mortgages and NO CREDIT DEFAULT contracts. If they wanted insurance, a market, a legitimate one, would have to be formed, with proper reserves too, and charge an apppropriate, acturary premiun. All subject to AUDIT by the appropriate regulating authority, in many cases, State Insurance and Baniking Depts., and the Feds..

The credit default gamblers would out of luck and out of business, thus the Earth revolves. Credit default contracts ARE gambling, and as the shares were sold on both sides of the bet multiple times, it is impossible for every one to come out whole no matter what.

This would instantly restore some confidence (as long as the Pres. stuck to it) , restore value to the now "toxic" assets, establish a firm floor from which to work, and start the recovery.

If the President with the complicity of the Congress keeps throwing money at the problemn, there MIGHT be short term up bumps, followed by hyper inflation, 15% to 20% unemployment, greatly increased interest rates and a new "misery index" that will exceed 50% as the debt service creeps up to 85% of GDP. The disaster would mean the end of the world as we know it as more than a verse from a catchy tune.



 

[Hawkgirl]

Market down triple digits today after gov't hearing on buying up toxic assets with taxpayer money. How low will it go before Obama and his posse get a clue to not fluck with capitalism?

[Wineslob]

Market down triple digits today after gov't hearing on buying up toxic assets with taxpayer money. How low will it go before Obama and his posse get a clue to not fluck with capitalism?

Never. I think the only thing that will "stop" them is the screeching of the media when the shit gets too deep. Judging from some of the "questions" posed last, I think the honeymoon is wearing thin.
Libtards hate being spotlighted.