Wednesday, January 28, 2009

"Bad Bank" Rally

Financials are ripping it up today because a "bad bank" solution to the market's troubles is in the offing. Well, before any declares the financial crisis over, I have a few questions:

- How will the bad bank price the assets? This was the problem with the TARP in the first place.

- Who is going to run the bank bank? Seems like the FDIC wants the job, although their restructuring efforts as of late are unimpressive.

- How will the bad bank pay for the assets? I am assuming the Treasury will issue debt.

- Will the sellers maintain any profit / loss potential from the disposed assets?

1 comment:

Teddy KGB said...

A secret taped conversation of Tim Geithner after this latest proclamation. Our chief two weapons against this crisis are fear and surprise and ruthless efficiency, no no Our Three main weapons against this crisis are fear, surprise, ruthless efficientcy and a fanatical devotion to Obama. no! our four