My Bailout Plan
by JS
I came up with my own bailout plan. It’s the same as Senator Dodd’s plan, except that the first 10 billion dollars must come from private individuals who have profited from the private financial sector over the last ten years, and furthermore, Paulson himself must put up over 80% of his personal fortune. These people must pledge to buy and hold the toxic assets they purchase under the same terms as the government.
Hey, to hear them talk, they’ll make money on the deal. Put up or shut up.
UPDATE: I just want to go on record that this entire “value-to-maturity” is nonsense. When I worked at Bear Stearns I had a chance to look at the kinds of “securities” that were kept on the books. They were residuals of residuals of residuals. Keep in mind that the last tranche to get paid in a deal is the residual. The residual of a residual is a structure where the underlying collateral is already a residual. Even a 1% drop in home prices (or a corresponding increase in foreclosures) would guarantee that these “assets” would lose all value. The “value-to-maturity” is zero. We’re looking at home price declines and foreclosure rates far more than what would be needed to eliminate all value in these assets.
Think I’m wrong? Demand that the fed open the books on Maiden Lane LLC. Lets have a public accounting of what these toxic assets really amount to.
