Bad Bank, or Gov Bank? Choices, Choices!

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machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Bad Bank, or Gov Bank? Choices, Choices!

Obama's brain trust is working overtime this weekend. Their
calculators keep blowing out, cuz most of them don't have enough zeros.
Nevertheless, they soldier on, says the New York Post:

As the Obama economic team huddles this weekend in an attempt to
hammer out the framework of their plan, three options have been bandied
about:

* Nationalizing the banks.

* Creating a government-owned "bad bank" to take the toxic assets off of the bank's balance sheet.

* Continuing the Bush Administration rescue plan of pumping in taxpayer money on an as-needed basis.

Option 3 has been in effect since October and the banks keep dying.
So obviously, Nos. 1 and 2 are moving to the top of the list. Regarding
Option 1, nationalization, the Post reveals a rather startling fact:

There are 318 banking institutions right now receiving government
assistance to prop up their balance sheets
, and 8,000 firms in the US
banking industry overall. The trillion dollar question: How many of them would fall under the nationalization plan?

Three hundred and eighteen? Three hundred and eighteen? I had
no freaking idea. And I'll bet my KongressKlowns didn't either, after
they simply closed their eyes and handed over $700 billion to a couple
of boys named Hank and Timmy who they met on the playground.

But it gets worse. Lots worse. The 'Bad Bank' idea has been done
before, during the 1980s savings and loan crisis. Back then, it was
called RTC -- the Resolution Trust Corporation. So the system will tend
to follow these well-worn footprints. And, as the Post points
out, it all comes down to price:

The "bad bank" plan poses a difficult problem for the Feds, as
they
would have to carefully determine the proper price to place on the
eroding assets. Pay too much for the toxic mortgage securities and
taxpayers will
never be able to profit on the deal - and may even have to eat losses
if mortgages don't come back to the original levels. Pay too little and
hundreds of banks will have to write down their assets, requiring them
to raise even more capital.

"The [pricing toxic paper] is enormously complicated to get right,"
Geithner said. "We want to be very careful, not just that we are using
the taxpayer's money most effectively ... but also that we do these in
ways where the taxpayer and the government understands the risks we're
taking."

Timmy, Timmy. You've moved up from pickpocketing kids' lunch money
to looting the Treasury. It is stone obvious that there's only one
price going to be paid for these toxic assets -- TOO MUCH. After all,
if they could be sold at the market price, there would be no need for a
Bad Bank. Plus, we have the RTC's history to guide us. It ultimately
cost $250 billion in 1980s dollars -- more than a half trillion in
present-day peachbacks.

Yeah, and they talked about those mythical 'taxpayer profits' back
in the RTC days too, as insiders scooped up the good stuff at pennies
on the dollar, while leaving taxpayer-suckers with the black holes and
brownfields. Fool me once, shame on — shame on you. Fool me — you can't get fooled again. Or as long as we're quoting The Who ...

Meet the new boss; same as the old boss.

barrt's picture
barrt
Status: Silver Member (Offline)
Joined: Aug 25 2008
Posts: 171
How about a Good Bank instead of a Bad Bank?

 

Instead of a Bad Bank, which you so eloquently destroy macinehead, how about a Good Bank?

First though you would need to get rid of your glorious Federal Reserve and take back the right to issue your own money (which was what your forefathers gave their lives for but was incredibly then given away in 1913) Then you open The Good Bank, owned by the people.

The Good Bank does not loan money into existence and charge interest for the privilege of doing so like your privately owned Fed Res does, thereby enslaving your nation forever because the debt cannot be paid off, but spends it into existence on things that would help build the country like hospitals, new energy infrastructure, bridges etc etc thereby liberate your people

You could then let all the Crap Banks go under, or rather just close them down, give their assets back to the taxpayer, wipe out all debts owed to these criminals thereby enriching your people. a double whammy of goodness!

Mr. Soderberg can explain it much better in this post http://www.peakprosperity.com/forum/what-money/12101

But watch out though it seems like whoever dares make a serious attempt to end the Fed Res or hurt the shadow money lenders business, gets shot, right Abe? right Jfk?

Ps I loved the hidden Bush misquote macinehead, quality Smile

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