Comments on: Where’s my freaking bailout?

By: Kirsten

Kirsten — Sat, 11 Apr 2009 18:08:20 +0000

I am not opposed to a bailout of the financial industry. I am, however, opposed to a one-sided bailout that rewards financial mismanagement while providing no benefit to the American taxpayer. I am angry with that too.

By: Marc Graves

Marc Graves — Fri, 30 Jan 2009 04:31:22 +0000

I don’t like the fact that there appears to be no real oversight as to where and how the money is being awarded. I don’t understand why the banks that are receiving bailout money are allowed to acquire other failing banks? Where’s my bailout…I think I’d like to buy some cheap real estate!

By: Dylan

Dylan — Sat, 27 Sep 2008 23:06:53 +0000

The problem with the Paulson plan is that stabilizing the prices of mortgage-backed securities will last only as long as the $700 billion. I am guessing that is significantly less than the total amount of insufficiently collateralized mortgage-backed securities out there. What happens when the Treasury money runs out? The floor drops again, and all the securities that the government now owns are worth less than they paid for them.

On the other hand, if you use the same $700 billion to invest in the companies involved, they’ll have the capital they need to set their own price floors — or, more realistically, to write off the bad securities and be able to weather the fallout from that.

I’m totally in favor of a bailout. I just think the Paulson plan is a particularly stupid version of it.

I’m far from being a finance whiz myself, btw.

By: You Mon Tsang

You Mon Tsang — Sat, 27 Sep 2008 18:44:08 +0000

Doh! I meant to say earlier that I am NOT a finance whiz. Blah.

By: You Mon Tsang

You Mon Tsang — Sat, 27 Sep 2008 18:43:38 +0000

Not with you on this one, Dylan.

I am a finance whiz, but I understand the main problem to be the death spiral of the value of mortgage-backed securities. With the new mark-to-market rules, the value of these securities just cannot stabilize without a buyer that is willing to pay a floor. At this point, no private institution has the ability to set the market floor for all the debt out there.

The Paulson plan sets out to do that. Now I believe the additional oversight and the ability for the government to get benefits from this bailout (thru warrants from participating institutions or interest that needs to be paid on the purchase) is prudent.

But I thinking the essential piece of the plan (for the government to be the stabilizing buyer) is sound.