LOL...investors dont want to fund bailout - DFWstangs Forums
 
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post #1 of 23 (permalink) Old 02-09-2009, 07:28 PM Thread Starter
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LOL...investors dont want to fund bailout

Even they know better and all they do is buy risky shit

http://news.yahoo.com/s/ap/bailout_plan



WASHINGTON Ė Investors want the Obama administration to sweeten the deal before they agree to buy risky debt from U.S. banks as part of the government's retooled program to rescue the ailing financial industry.

The administration is expected to announce Tuesday that the government's latest bailout strategy will be enticing big investors to buy more than $1 trillion in troubled assets from the banks. The hope is that, free from the drag of subprime mortgage debt and other bad investments, banks will be more likely to start lending money again and the economy will rebound.

Treasury officials, briefing Congress on the plan Monday night, suggested two approaches that the administration was considering to deal with toxic assets, according to congressional staffers who spoke on condition of anonymity before the program was announced.

These aides said the government might provide guarantees for the bad assets to establish a floor on possible losses or perhaps provide low-cost financing through the Federal Reserve for investors willing to purchase the bad assets.

President Barack Obama, speaking at a prime time news conference Monday night, promised that his overhaul of the financial rescue program would bring"transparency and oversight" to the heavily criticized program.

He said the overhaul would correct previous mistakes such as a "lack of consistency" and what he said was the failure to require banks to show "some restraint" in terms of executive compensation and spending in such areas as corporate jets.

Exactly how the administration plans to persuade hedge funds, insurance companies and private equity firms to buy into some of the world's riskiest investments remains unclear. But investors said Monday they were unlikely to buy into the idea unless the government puts up a lot of the money and promises to absorb a lot of the losses if things go badly.

"The first loss has got to be the government's," said Wall Street veteran Muriel Siebert, who runs the brokerage Muriel Siebert & Co. "Maybe the first 25 percent of losses. We don't know what's in some of those bonds."

Billionaire Wilbur Ross, who runs the private equity firm WL Ross & Co., said investors want to know how much risk the government will accept if the investments go sour, and how much money the government is willing to put up ó likely in the way of low-interest loans.

"And any sort of financing is something I would be interested in," said Jeffrey Gundlach, chief investment officer of Los Angeles-based money management firm The TCW Group. "There are distressed assets that I would like to buy now but I can hardly get anyone to lend me any money in the current environment."

Treasury Secretary Timothy Geithner will unveil the program in a speech on Tuesday at the Treasury Department. The partnership with the private investors would be just one element of a major overhaul of the troubled bailout program, which has come under heavy criticism for distributing billions of dollars with few requirements on how banks would use the money.

"I want to see the incentives and the restrictions," said Jacob Benaroya, managing partner of New Jersey-based Biltmore Capital Group, a hedge fund that's buying up to $100 million in mortgage debt per year. For example, he said, he's unlikely to be interested in buying loans that must be held for 30 years.

Lawrence Summers, head of the National Economic Council, said Sunday the Obama administration had received a number of proposals on how the private sector could participate in the solution to the banking crisis.

"It can't all be private capital ... not given the size of the financial mess we have inherited," Summers said in an interview on "Fox News Sunday." But he said the administration believed the private sector could play a significant role with the right types of government guarantees.

Investors want to know more about what those guarantees will be. Stephen L. Nesbitt, whose firm Cliffwater LLC advises clients considering alternative investments, said people want returns of about 20 percent before they will buy into really risky, distressed debt.

"They need help from the government to get there," Nesbitt said. "Either by increasing the return or decreasing the risk."

The market alone is not likely to fix the problem because banks and investors don't agree on how much the assets are worth.

If a bank made $100 million in subprime loans, for instance, the face value of those mortgages is still $100 million. But investors won't buy for anywhere near that price. Some of those mortgages are so risky, they say, the value is nearly nothing. But banks are reluctant to sell for pennies on the dollar.

"Why would anyone want to buy these assets at inflated prices?" said Bill Fleckenstein, a Seattle-based hedge fund manager. "There's this argument that the banks can't sell at market prices because the market price is depressed. Well, that's what the market price is."

Lynn Tilton of the private equity firm Patriarch Partners said she wants to know what the government will consider a "bad asset" under this deal. There has to be some effort to find a real value, she said.

The Obama administration wants to find a way to get investors a good deal without bankrupting banks and adding to the economy's woes. And the government doesn't want the new plan to become a taxpayer-funded, get-rich-quick deal for investors.

"It's got to be something attractive to the private market, but on the other hand it has to be something taxpayers can live with," said Donald B. Marron, CEO of the private equity firm Lightyear Capital, who said he is interested in investing in the assets and has a team monitoring the terms of the deal.

The first $350 billion of the $700 financial bailout has been spent. And the Obama administration has said it will devote up to $100 billion of the remaining money to help fight home foreclosures.

That leaves about $250 billion to put together a deal for trillions of dollars in assets. Like so many other details in the bailout, how it will be paid for remains unclear.

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post #2 of 23 (permalink) Old 02-09-2009, 09:02 PM
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It's a shitty deal, period. It won't work...just ask Japan. The "lost decade" finally convinced then that throwing money down a black hole (8 times in 9 years!) did absolutely nothing for their economy. Why we can't learn from that is beyond me.

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post #3 of 23 (permalink) Old 02-09-2009, 11:20 PM
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I think they want to stay away because there are signs of life and of the bottom having been reached or at least getting close. This bill may screw the recovery in a first class way, not to mention the long term financial survivability of the country.

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post #4 of 23 (permalink) Old 02-10-2009, 07:45 AM
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If the government guarantees the buyer's equity then they should get a split of the deal. That's the way I look at it.

But really I think they should do nothing. Just let it work itself out.
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post #5 of 23 (permalink) Old 02-10-2009, 08:19 AM
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Let me get this straight:

We (the American people) are going to lend Wall Street money (that we donít have) to buy billions of dollars of risky debt that Wall Street created (based on greed and bad lending practices) at a low interest rate. Then, if the deal goes bad we are going to eat the first 25% of the losses (and most likely be out the principal we loaned originally). All of this so that banks can continue to loan money (they donít really have) so people can buy houses and cars (they really canít afford).

I am speechless, I really am.

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post #6 of 23 (permalink) Old 02-10-2009, 08:22 AM
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Originally Posted by slow06 View Post
Let me get this straight:

We (the American people) are going to lend Wall Street money (that we donít have) to buy billions of dollars of risky debt that Wall Street created (based on greed and bad lending practices) at a low interest rate. Then, if the deal goes bad we are going to eat the first 25% of the losses (and most likely be out the principal we loaned originally). All of this so that banks can continue to loan money (they donít really have) so people can buy houses and cars (they really canít afford).

I am speechless, I really am.
That's about it.

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post #7 of 23 (permalink) Old 02-10-2009, 08:31 AM
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I don't think that Obama has the ability to learn from anything or anyone for that matter. This is the most arrogant self centered President we have ever had. Most Liberals are that way. He really believes his shit don't stink.

You can't fix stupid, but you can vote it out.

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post #8 of 23 (permalink) Old 02-10-2009, 09:06 AM
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I don't think that Obama has the ability to learn from anything or anyone for that matter. This is the most arrogant self centered President we have ever had. Most Liberals are that way. He really believes his shit don't stink.
Obama needs to shut up with the gloom and doom, and allow the markets to clean themselves up. IMO he singlehandedly is keeping the market down with all of his talk of catastrophe. The US economy has a pretty good track record of working thru hard times.

Let a few banks fail, let a few companies fail, and lets get this over with.
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post #9 of 23 (permalink) Old 02-10-2009, 09:10 AM
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Obama needs to shut up with the gloom and doom, and allow the markets to clean themselves up. IMO he singlehandedly is keeping the market down with all of his talk of catastrophe. The US economy has a pretty good track record of working thru hard times.

Let a few banks fail, let a few companies fail, and lets get this over with.
It's funny how he blew right past the Carter administration's horrendous economic numbers, and took us right back to the "Great Depression".

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post #10 of 23 (permalink) Old 02-10-2009, 09:24 AM
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It's funny how he blew right past the Carter administration's horrendous economic numbers, and took us right back to the "Great Depression".
Well, none of the young voters that helped elect obama remember jimmy carter. Jimmy carter's economic policies damn near ruined this country. We're gonna have to go thru another round of ruinous democratic economic policies and runaway inflation before the lesson will be taught yet again.
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post #11 of 23 (permalink) Old 02-10-2009, 09:26 AM
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Well, none of the young voters that helped elect obama remember jimmy carter. Jimmy carter's economic policies damn near ruined this country. We're gonna have to go thru another round of ruinous democratic economic policies and runaway inflation before the lesson will be taught yet again.
We are going to have a lot more Republicans in four years.
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post #12 of 23 (permalink) Old 02-10-2009, 09:33 AM
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We are going to have a lot more Republicans in four years.
that's my opinion also. If not 4 years then certainly in 8 years the wheels will have come off. With the US printing so much money runaway inflation has to be just around the corner.
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post #13 of 23 (permalink) Old 02-10-2009, 09:35 AM
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Quote:
Originally Posted by slow06 View Post
Let me get this straight:

We (the American people) are going to lend Wall Street money (that we donít have) to buy billions of dollars of risky debt that Wall Street created (based on greed and bad lending practices) at a low interest rate. Then, if the deal goes bad we are going to eat the first 25% of the losses (and most likely be out the principal we loaned originally). All of this so that banks can continue to loan money (they donít really have) so people can buy houses and cars (they really canít afford).

I am speechless, I really am.
lol

Not too far from the truth.
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post #14 of 23 (permalink) Old 02-10-2009, 09:40 AM
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that's my opinion also. If not 4 years then certainly in 8 years the wheels will have come off. With the US printing so much money runaway inflation has to be just around the corner.
You know, on second thought this might not be the case, because of changing demographics. You've got three large voting blocs now, the blacks, the hispanics, and women. The blacks and hispanics are always going to vote for big government and handouts. The women are going to vote for safety and reduction of rights. This does not bode well for conservatives in the long run, which tends to be white males.
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post #15 of 23 (permalink) Old 02-10-2009, 09:44 AM
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You know, on second thought this might not be the case, because of changing demographics. You've got three large voting blocs now, the blacks, the hispanics, and women. The blacks and hispanics are always going to vote for big government and handouts. The women are going to vote for safety and reduction of rights. This does not bode well for conservatives in the long run, which tends to be white males.
People will vote for a yellow dog once the guy in office pisses them off enough. The hispanics are actually a swing vote.
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post #16 of 23 (permalink) Old 02-10-2009, 10:00 AM
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Geitner announced his "plan", and the market fell almost 300 points a few minutes ago...

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post #17 of 23 (permalink) Old 02-10-2009, 10:42 AM
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Geitner announced his "plan", and the market fell almost 300 points a few minutes ago...
A few weeks ago people were begining to think the bottom was around the 8,500 mark on the Dow and now it looks to be in the 7,900 range. Seems like thats the sweet spot and the Dow really doesn't fall below that. I just hope they finally find a bottom and things start to improve slowly.

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post #18 of 23 (permalink) Old 02-10-2009, 10:56 AM
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I'm still thinking 6800, but I hope that I am wrong.
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post #19 of 23 (permalink) Old 02-10-2009, 10:56 AM
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Geitner announced his "plan", and the market fell almost 300 points a few minutes ago...
Like I said, the people in washington just need to shut up and let the market recover.
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post #20 of 23 (permalink) Old 02-10-2009, 11:28 AM
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Geitner announced his "plan", and the market fell almost 300 points a few minutes ago...

bottom....7500 or less. Hope some of the talking heads will STFU and sheeple will start to get on with things.


ah....never happen

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post #21 of 23 (permalink) Old 02-10-2009, 11:38 AM
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bottom....7500 or less. Hope some of the talking heads will STFU and sheeple will start to get on with things.


ah....never happen
Check that...market is down 340 since the Gietner announcement. I just heard it passed the senate 61-38. Without the "RINO's", it would not have made it.

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post #22 of 23 (permalink) Old 02-10-2009, 01:15 PM
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post #23 of 23 (permalink) Old 02-10-2009, 01:21 PM
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if there is even a slight rebound tomorrow, shit looks good for me.
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