>>They want to pay mature values for these mortgage instruments. So I was thinking/worrying about further marking downs, but they are really thinking about firing up a marking up process.
And they expect congress to just roll over after saying that???
Yep.<<
If that's really the case, this isn't going to fly, if my guess is right. There are probably enough bloody minded Senators to stop it.
I return to my suggestion of a contingent liability on bailout participants.
Let Paulson overpay now for toxic debt, but any shortfall in the value of the debt bought by the government, calculated in say 5 years' time (or 10, or in tranches over a number of years), should become a liability due to the government from the bailed out bank.
If these bonds are really worth what Paulson is going to pay for them, then no problem. If not, then crisis averted for now, and the banks that should be bust can go bust later.
Forget equity stakes - it would take forever to agree any principles which could be agreed by everyone (assuming that were even possible), and we don't have time. |
