G.O.P.: BANKS GET GINORMOUS INFLATABLE LIFE RAFT, THOSE WITH IMPOSSIBLE STEP-UP MORTGAGES TO PAY GET ... 'HOPE NOW ALIIANCE'
Now that they've scared the pants off of legislators, with few figures and facts (ahem!), Bush's GOP is moving in with a request for $700 billion in money for ... quasi corporate welfare.
They want authority to buy "mortgage-related assets". Well, that's impossibly broad. Does that mean that the treasury is going to lift some Credit Defualt Swaps from AIG?
I cannot help but think that 'buying them up' is the wrong approach. It may have worked for the S&L crisis, because, as I recall, a number of those small institutions were going broke.
CAUGHT BY SURPRISE?
Whatever the case, the proposal from the Bush Treasury is extremely thin, for a "crisis" that has been going on for over a year. It makes it look like they just missed a huge part of the systemic risk estimate, when they "got tough" last fall.
SOME 'SPLAININ' TO DO...
At a minimum, someone needs to explain why buying up everything is somehow better than what the Fed is currently doing, which is more-or-less extending its balance sheet to those institutions who have sludge in their portfolio.
If it is related to derivative contracts, including CDOs and CDS, then someone needs to spell out what the plan is for those particular "assets", right?
Saturday, September 20, 2008
Monetizing the Merde
