Monday, March 23, 2009


Asset Purchase Program Details

The Obama administration's plan to finance purchases of as much as $1 trillion in toxic assets from banks will include programs supported by the Treasury Department's bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp. Here is a look at how they will operate.

--Public-Private Investment Program: The umbrella organization that will support the effort to entice private investors to join with the government to purchase troubled assets. The administration plans to commit $75 billion to $100 billion from the government's $700 billion bailout program to support $500 billion in troubled asset purchases initially with the potential to expand to $1 trillion over time.

--Troubled Mortgage Loans: The FDIC, the agency that insures deposits at the nation's banks, would operate auctions of troubled mortgage loans and then provide financing to the winning bidders. Under an example provided by the administration, the FDIC loan would cover 86 percent of the purchase price of the troubled mortgages with the Treasury's bailout fund contributing 7 percent and the winning private investor bidder contributing the remaining 7 percent.

--Troubled Asset-Backed Securities: The Treasury and the Federal Reserve announced they were expanding the Term Asset-Backed Securities Loan Facility, or TALF, beyond its goal of boosting consumer debt in the area of credit cards, auto loans and student loans. The facility, which has the capacity of supporting $1 trillion in loans, will be expanded to cover securities backed by residential and commercial real estate and other types of asset-backed mortgages. Five asset managers will be chosen by Treasury to compete for purchases of troubled asset-backed securities with financial backing provided by Treasury and the TALF. The assets would be held in public-private investment funds.

OBAMA continues doing it right!

The Obama plan to solve the `toxic’ assets (?) of banks that has frozen the leading
of banks is a winner! It let’s the market value the toxics and take care of this problem which is a major piece in the overall finance problem.

The DOW jumped almost 500 (497.48) points on March 23/09 is first POSITIVE reaction proof. Plus there are other signs that the very complex steps taken by Obama administration are working in the record!

The GOP is consistent that NOTHING Obama is doing is right.
Again this problem is faled according to the GOP. How predictable!
They are wrong again! I wouldn't what to be these dummies when it WORKS!!
Like in 1993 when BILL CLINTON solved the deficit problem of another BUSH!

Some weird folks are reaction to BO laughing on `60 Minutes’ night.
I’v no problem withe Prez - What would be better sack cloth and ashes?
Program noy live and subject to CBS TV edit out of context!

Two weeks ago people were upset because BO was to sober!?
Forget the nit wits, who have a dammed if you do and dammed
if you don’t silliness!

AIG BONUS – The media, congress, and the people don’t get it!
The bonus was paid (155 million) to people who got rid of over a trillion and half dollars in bad business for AIG!!!
This makes the company less likely to fail and it’s bad ripple effect.

March 23 2009 HIGHLIGHTS

E.J. Dionne, Jr.Washington Post 9-23-09
A deep narrative is taking root in the political class, and it goes something like this: Obama is biting off way more than he can chew, "overloading" the system and dealing with all sorts of "side issues," when he should be focusing solely on the broken economy. He is said to be asking Congress to do too much.
Note that anyone who makes an argument of this sort is freed from responsibility to mention any of the specific problems Obama is proposing to take on. Insisting the economy trumps everything means you don't have to say a thing about health-care reform, energy, education and taxes.

Meizhu Lui Washington Post 9-23-09
Every three years, the Federal Reserve, in its Survey of Consumer Finances, takes a look at how U.S. households are doing and reports on our assets and liabilities. The euphoria of our gambling spree is over. In the harsh glare of morning, the hangover is tough. And the latest data are from 2007, so they don't even capture the worst of the decline.
The net worth of the average American family is less than it was in 2001. We borrowed more for that trip to Vegas than we brought home. Everyone knows this now.
But here's something being talked about much less: The gap between the wealth of white Americans and African Americans has grown. According to the Fed, for every dollar of wealth held by the typical white family, the African American family has only one dime. In 2004, it had 12 cents.

Obama Plan announced March 23-09 NYTimes
At the core of the financing package will be $75 billion to $100 billion in capital from the existing financial bailout known as TARP, the Troubled Assets Relief Program, along with the share provided by private investors, which the government hopes will come to 5 percent or more. By leveraging this program through the Federal Deposit Insurance Corporation and the Federal Reserve, huge amounts of bad loans can be acquired.
The private investors would be subsidized but could stand to lose their investments, while the taxpayers could share in prospective profits as the assets are eventually sold, the Treasury said. The administration said that it expected participation from pension funds to insurance companies and other long-term investors.
The plan calls for the government to put up most of the money for buying up troubled assets, and it would give private investors a clearly advantageous deal. In one program, the Treasury would match one-for-one every dollar of equity that private investors invest of their own money in each “Public Private Investment Fund.”
On top of that the F.D.I.C. — tapping its own credit lines with the Treasury — would lend six dollars for each dollar invested by the Treasury and private investors. If the mortgage pool turns bad and runs big losses, the private investors would be able to walk away from their F.D.I.C. loans and leave the government holding the soured mortgages and the bulk of the losses.
The Treasury Department offered this illustrative example of how the program would work: A pool of bad residential mortgage loans with a face value of, say, $100 is auctioned by the F.D.I.C. Private investors would submit bids. In the example, the top bidder, an investor offering $84, would win and purchase the pool. The F.D.I.C. would guarantee loans for $72 of that purchase price. The Treasury would then invest in half the $12 equity, with funds coming from the $700 billion bailout program; the private investor would contribute the remaining $6.
For a relatively small equity exposure, the private investor thus stands to make a considerable return if prices recover. The government will make a gain as well. In the worst case, the bulk of the risk would fall on the government. The presumption, of course, is that the auction will lead to realistic purchase prices.