Why the bailout wont work

[sdrealtor]

or better yet why we have been sold a bill of goods by our leadership.

We are being told that the benefit to us will be the recovery of the market where we will make money on the assets the gubment buys at fire sale prices. What they aren’t telling us is what they will be buying. My guess is they will be buying 100% under water HELOC’s that will never have any value. They will all be written off and we will never see a dime back.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[DWCAP]

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.

[DWCAP]

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.

[DWCAP]

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.

[DWCAP]

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.

[DWCAP]

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.

[jpinpb]

So the banks don’t take a loss. The taxpayers do. This I understand. But what does it mean for housing prices? Further declines or stablization? Is the inventory the banks are holding on to going to be released to the market? Are the banks going to negotiate down loans and people will get to stay and diminish the inventory by keeping the people in them?

[jpinpb]

So the banks don’t take a loss. The taxpayers do. This I understand. But what does it mean for housing prices? Further declines or stablization? Is the inventory the banks are holding on to going to be released to the market? Are the banks going to negotiate down loans and people will get to stay and diminish the inventory by keeping the people in them?

[jpinpb]

So the banks don’t take a loss. The taxpayers do. This I understand. But what does it mean for housing prices? Further declines or stablization? Is the inventory the banks are holding on to going to be released to the market? Are the banks going to negotiate down loans and people will get to stay and diminish the inventory by keeping the people in them?

[jpinpb]

So the banks don’t take a loss. The taxpayers do. This I understand. But what does it mean for housing prices? Further declines or stablization? Is the inventory the banks are holding on to going to be released to the market? Are the banks going to negotiate down loans and people will get to stay and diminish the inventory by keeping the people in them?

[Author]

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