Jeffrey Sachs in the HuffPo: Will Geithner and Summers Try to Raid the FDIC?
I’m glad this FDIC issue is at least getting some exposure
The FDIC is lending money at a low interest rate and on a non-recourse basis even though the FDIC is likely to experience a massive default on its loans to the investment funds.
In essence, the FDIC is transferring hundreds of billions of dollars of taxpayer wealth to the banks.
With a little arithmetic, we can calculate the size of that transfer. Investors will actually be willing to bid $581 billion for the $360 billion of real market value of the toxic assets, in effect transferring $221 billion from the FDIC (taxpayers) to the bank shareholders!