Open Thread

a good summary here
http://snipurl.com/egfti

and some more commentary from JK Galbraith’s son
http://snipurl.com/egfuw

Oh, it’s very simple.

We do nothing — we’re screwed.

We pour billions into the economy — we’re screwed.

Either way, we’re screwed.

Cobblehiller,

Paul Krugman had a good column on it today:

– http://www.nytimes.com/2009/03/23/opinion/23krugman.html

I also recommend today’s Brian Lehrer show:

– http://www.wnyc.org/shows/bl/episodes/2009/03/23/segments/126924

Sorry I’m late – went to see an immigration lawyer today.

In case you have only seen the headlines, here’s where you can read more about Geithner’s announcement.

http://www.treas.gov/press/releases/tg65.htm

Sample Investment Under the Legacy Loans Program

Step 1: If a bank has a pool of residential mortgages with $100 face value that it is seeking to divest, the bank would approach the FDIC.
Step 2: The FDIC would determine, according to the above process, that they would be willing to leverage the pool at a 6-to-1 debt-to-equity ratio.
Step 3: The pool would then be auctioned by the FDIC, with several private sector bidders submitting bids. The highest bid from the private sector – in this example, $84 – would be the winner and would form a Public-Private Investment Fund to purchase the pool of mortgages.
Step 4: Of this $84 purchase price, the FDIC would provide guarantees for $72 of financing, leaving $12 of equity.
Step 5: The Treasury would then provide 50% of the equity funding required on a side-by-side basis with the investor. In this example, Treasury would invest approximately $6, with the private investor contributing $6.
Step 6: The private investor would then manage the servicing of the asset pool and the timing of its disposition on an ongoing basis – using asset managers approved and subject to oversight by the FDIC.

When you delve into the details, this is actually very scary stuff.