My understanding is that they will hold a reverse auction. Meaning bank1 offer to sell at 80% of face value, and bank2 offers to sell at 75% and so they get to sell and bank1 gets bubkiss. Problem is that the banks know that the GOV will buy, so they will hold out for higher prices. Then the GOV will hold them for a while, sell them off bank to the very same banks that sold them origionally at 35% face value and take a 40% hit to the taxpayer. The Banks get their loans back in the future at a market price and are recapitalized now. The taxpayer takes it in the shorts.
I kinda think it wont work because after the banks get their money out, they are not likely to go charging back into the very mess they just got out of. People who dont need credit will have it, and everyone else will have to really work for it. The GOV can bail the banks out, but they cant force them to lend liberally again. All we did was send 700b (-whatever pitance they recover) to the shareholders of the major financial institutions. This shouldnt be supprising considering the origionators of this are former employees of the institutions we just became benifactors for.
