“The public-private partnerships could be a device for attracting investors to buy troubled assets at some discount in hope of future profit, offering financing support from the government for those that are willing to buy the assets.”
“Neel Kashkari, the Treasury’s interim administrator for the $700 billion rescue fund, also told lawmakers this week that private investors are ready to invest in distressed mortgage assets if they can get financing. With no private financing available, they could only pay prices that are too low for banks to be willing to sell.”
This will end badly. Another bubble that further impoverishes 95% in the US.
This is a disaster for job creation. Note the following quote from that article: “The public-private partnerships could be a device for attracting investors to buy troubled assets;” and not investment in jobs. The smart money will go for the 20% return from “buying troubled assets”, and not even look at investment that create jobs that only yield a 10% return.
It reads as if it were another fraud, or ponzi scheme.
In the Madoff debacle we were repeatedly told that promising continual returns over 10% are clear evidence of fraud. And here we go again listening to the same people who broke our financial system promising 20% return, again.
Are these “assets” (loans) to be offered to the actual borrower under the same terms as the “investors” plus an administration fee? If not why not?
The loans the Bank mark down should be offered to borrowers before being offered to investors, as mortgage borrowers would like to refinance their mortgage for $0.30 on the dollar.
These investors expect high return for their investment, 20% or so per year.
“It has been very successful — very strong,” John Lawrence, the company’s head of loan servicing, told Mr. Kurland one recent morning…“In fact, it’s off-the-charts good,”
The individual mortgagors, the taxpayers backing the banks, need first refusal to keep their heads above water. Confidence will start to rebuild once people see that the ‘little guy’ is able to survive. Confidence is based on trust, but there’s very little of that commodity available right now, so confidence will have to come as a result of evidence that things are getting better.
If people begin to hope again, and THEN they are DISAPPOINTED — give up. Mr. Obama has been given the trust of the people of America and the world, because his motivations seem genuine; he seems to really want to set things right. If he screws up, no one will trust him, or the democrats.
Let me repeat my main point, other than my disgust at this apparently clear and obvious fraud:
Offer the individual borrower a deal first. Fuck the “smart money” sucking out the next 50% of what we have left.