The Obama administration has decided on a new package of aid measures for the financial services industry, including a bad bank component, and is expected to announce them next Monday, according to a source familiar with the planning.What's a ring fence concept?
The plan will be "smaller" than originally expected, said the industry source, and centered around government guarantees and insurance of troubled assets, what's called a "ring fence" concept.
The ring fence concept has already been used with Citigroup and Bank of America.Oh, well that's giving me warm fuzzies. Do what we've done for BoA and Citigroup for every bank in America. Surely if we throw trillions at the problem it will naturally form a dam out of all those dollar bills and stanch the flow of red ink. Hooray, our fiduciary genius is manifest! Cookies and juice boxes for everyone!
Bonus stupidity:
Under the emerging plan, the government will buy toxic assets below the banks "carrying value," which is basically market value, but not at fire sale levels, the source said.Buy crap from bank, allow banks to lie about taking loss on crap, people will flock to buy bank stock based on huge lie that everyone's aware of!Negotiators hope that concept would placate both taxpayer and Congressional concerns about the government over-paying for the assets. But, the source noted, it could "trigger an accounting problem for the banks," presumably because the institutions will have to report a loss on the transactions.
The Obama administration is now working on ideas to address that, which might entail, a temporary suspension of certain accounting rules.
PS, now do you see why Tim Geithner has to go?
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