No Bailout, No Problem?

That's how some of GOP's see things. The haggling on Capitol Hill includes an option where no bailout takes place. Check this out:

Negotiations continued Friday to revive the White House-backed initiative, a day after talks broke down in heated disagreement over the scope and cost of the unprecedented government intervention. The measure would remove billions of dollars in bad mortgages and other risky assets from banks’ balance sheets in a bid to calm frenetic financial markets and soothe a jittery public.

Some conservative GOP lawmakers Thursday denounced the plan as an unnecessary federal intrusion into the private sector and proposed a dramatically different scheme under which financial firms with bad assets would pay the Treasury to insure them, rather than sell them outright to the government. It was unclear what form the final proposal would take, though lawmakers from both parties reported making progress on a plan late Friday.

www.msnbc.msn.com...

It appears that some conservative GOP lawmakers want the banks to hold on the "not-so-good" assets till maturity while paying the government to insure them! But isn't it the same thing like buying the assets according to what the sellers feel that their bad asset is worth and start buying them from the lowest bidders first; the way Paulson wants to do it? That sets the market value of the junk -- which may turn out not to be a junk at all in some ten years, depending on the housing market situation, which the government can manipulate through setting up the prime rate.

The GOP option doesn't prevent losses to the taxpayers in case most of the questionable assets turn really sour. In that case, the government would have to find the money to cover the huge losses as an insurer. And what the insurance would cost; for how much would you insure an asset that has, as of recently, such a bad reputation? How would the stressed banks pay the premium and where would they get the money? And how would the credit market react to this option?

The now taxpayers would love to see this option go into effect thinking that ATM's will stop spitting the cash any time now, but the future taxpayers could hate it -- if the kaka hits the fan.


[edit on 9/26/2008 by stander]

Update:

House Speaker Nancy Pelosi told fellow Democrats during a private meeting Friday that the legislation would not let judges rewrite mortgagesto help bankrupt homeowners avoid foreclosure. That provision amounted to a deal-breaker for Republicans, whose votes are needed to pass the measure, she said, according to lawmakers at the meeting.

Democrats and Bush administration officials said they were willing to include House Republicans' idea of having the government insure distressed mortgages — but only as an option, rather than a replacement for the administration's more sweeping approach.

It appears that the idea to avoid the unpopular bailout by insuring the bad assets will be optional -- it's up to the banks if they chose this option to deal with their problem. I don't think anyone wants to get fired for suggesting to insure the junk.

reply to post by stander


insuracne will have the same anticipated result and cost $600 billion less

if they, & you, want to keep the exaggerated credit markets flush with cash to buy crud like 60" flat plasma screen tv's and $400 game playing systems... go ahead.


i'm getting cartons of cigarettes and cases of liquor to stash so i can barter with... gold & silver coin is not my idea of a stash


let the bail out or no-bailout happen,
I won't have a problem in either case...

because with the unreal escalation of regulation on all aspects of money transactions, only the people that accept the globalist agendas will have any access to the state monies...the rest of us will be in the black-market economy