WaterMan Posted September 23, 2008 Share Posted September 23, 2008 http://www.marketwatch.com/news/story/resc...}&dist=hpts 'It (the bailout) would do nothing in my view to let a single family save a home. It would do nothing to stop a CEO from dumping billion dollars of toxic assets on the back of American taxpayers.' — Sen. Chris Dodd, chairman of Senate Banking Commmittee Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 People forget the proposal isn't to build a stack of $700,000,000,000 and then light it on fire. We'll own assets that will have some residual value and will partially, totally or more than totally repay the $700,000,000,000. FWIW. Quote Link to comment Share on other sites More sharing options...
H8tank Posted September 23, 2008 Share Posted September 23, 2008 We'll own assets that will have some residual value and will partially, totally or more than totally repay the $700,000,000,000. The company's keep the good paper, the government gets all the bad paper. Would you sign on for that 'investment'? Quote Link to comment Share on other sites More sharing options...
Rebellab Posted September 23, 2008 Share Posted September 23, 2008 (edited) Didn't they just create a Housing Fix Legislation to the tune of $300,000,000? What happened to that? Paulson was on CNBC at noon testifying that this ($700,000,000) would help the banks with the housing crisis. Edited September 23, 2008 by Rebellab Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 The company's keep the good paper, the government gets all the bad paper. Would you sign on for that 'investment'? ... 'bad paper' at full prices is not what I understand is the proposal ... however, 'bad paper' at less than full value can be a phenomenal investment, but only for the patient and depending on the pricing ... I know some very talented investors who will buy the bonds in a company that they expect to go into bankruptcy! How crazy is THAT for an investment thesis!!! ...do you know why they do it? Because the equity they will receive upon emerging from bankruptcy a few years later will be worth substantially more than the value of the bonds they buy pre-bankruptcy. NOTE: In some ways, this is a no-win proposition for anyone in Congress, the US Treasury or the Fed ... if it works out well and the US Gov't makes money, then some may say that they bilked the citizenry out of their hard earned money and these profits are nothing more than a disguised tax on the backs of the working man (and woman) ... and if it doesn't work and the assets pay off for less than the amount invested, then some may say that the backs of the working man (and woman) paid for more executive pay and bailed out the rich ... or somesuch ... Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted September 23, 2008 Share Posted September 23, 2008 some of the things dodd is trying to add sound reasonable (to me). the BS $50 billion "stimulus" add-on I've heard obama and pelousy talking about is idiotic. Quote Link to comment Share on other sites More sharing options...
wiegie Posted September 23, 2008 Share Posted September 23, 2008 ... 'bad paper' at full prices is not what I understand is the proposal ... however, 'bad paper' at less than full value can be a phenomenal investment, but only for the patient and depending on the pricing ... I know some very talented investors who will buy the bonds in a company that they expect to go into bankruptcy! How crazy is THAT for an investment thesis!!! ...do you know why they do it? A not irrelevant question to ask is "why aren't they doing it now?" Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 A not irrelevant question to ask is "why aren't they doing it now?" Why isn't who doing what? Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 some of the things dodd is trying to add sound reasonable (to me). ...what do you like, specifically? Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted September 23, 2008 Share Posted September 23, 2008 (edited) ...what do you like, specifically? well, it seems that generally, his proposals are aimed at making it a slightly more bitter pill to swallow for the banks. tying the loans to reduced executive pay, etc. also a little more oversight and less absolute control by the treasury secretary. it sorta fits with the whole, "hey, you got your own damn selves into this mess" line of thinking. now, admitedly, this may just be ringing true with me on a populist level because I am ignorant of the full picture -- which is probably something I should be wary of anytime I find myself agreeing with chris dodd. Edited September 23, 2008 by Azazello1313 Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 NOTE: The whole requirement to hold equity stakes in the firms that sell assets to the "fund" in proportion to the amount of assets sold to the "fund" never really made sense to me. How would that be accounted for? Bank sells $100 million of "bad assets" to the "bail out fund" and receives cash US Treasury receives "bad assets" and $100 million of common equity in the bank? That is a gigantic disincentive to sell assets to the "bailout fund"...if true... I haven't really seen this discussed as to how he'd see it working... Quote Link to comment Share on other sites More sharing options...
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