Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: pompsander who wrote (9771)	3/23/2009 11:13:04 AM
From: DuckTapeSunroof	Respond to of 103300

Re: "I love asset auctions. If the government is going to (finally) set up the EBAY of troubled assets, it is a step in the right direction. With proper guarantees and lifelines in place, we can begin to move some of this crud off the bank's balance sheets, get a better price to put on it, and start it being worked by a buyer who thinks it can be turned, improved and resold.... Let's get on with it!" Yes, I agree. The asset auction feature of this 'troubled asset plan' (and the specific condition that the government will NOT PAY MORE then whatever the lowest auction bid is!) are the best parts of the program. And --- for those (& I've heard several) who claim that 'banks will not want to sell the bad CDS paper they have on their books at these auctions... because that might produce a 'low' valuation for that paper that they would then have to use as an indication to mark-to-market the rest of their book, I have one simple observation in response: If a substantially similar tranche gets sold at auction (thus, priced with new market valuation) by one of their competitors... then whether any bank "wants" to utilize the auction process or not... the exact same effects will appertain so far as mark-to-market rules. So, when you look a bit more closely at this often repeated objection, it appears to be more hot air then anything real.