Comments on: Buying Toxic Assets with Bailout Money http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 22:30:38 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Pat G. http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157457 Pat G. Fri, 27 Mar 2009 01:54:43 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157457 I agree completely with your last comment. Problem is, that horse called moral hazard left the barn area about six months ago. I agree completely with your last comment. Problem is, that horse called moral hazard left the barn area about six months ago.

]]> By: kfunck1 http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157446 kfunck1 Fri, 27 Mar 2009 01:11:54 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157446 @KidDynamite: "WHO is selling at these prices? i thought the whole problem was that the sellers wouldn’t sell at “depressed” levels?" This is the question I would like to know. The last time a major bank moved a significant chunk of junk, it was JPM, and it was WIDELY publicized because it was such a sham deal. Unless someone can confirm this story AND tell me who SOLD the assets, I will be skeptical of the accuracy of the article. @KidDynamite: “WHO is selling at these prices? i thought the whole problem was that the sellers wouldn’t sell at “depressed” levels?”

This is the question I would like to know. The last time a major bank moved a significant chunk of junk, it was JPM, and it was WIDELY publicized because it was such a sham deal. Unless someone can confirm this story AND tell me who SOLD the assets, I will be skeptical of the accuracy of the article.

]]> By: ottovbvs http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157336 ottovbvs Thu, 26 Mar 2009 18:48:20 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157336 Froglips Says: March 26th, 2009 at 10:02 am "I have been back in frog land for now 5 months," ....Froggo.....I rather envy you...Paris?....I envy you even more...when Britney drops her draws it's all over prime news but it's no more relevant than the doings of the EP which is a talking shop.....The fact is all across Euroland they have powerful and interventionist govt's and as long as that is the case the EP is largely irrelevant.....even if Mr Hannen gets his 15 minutes of fame and it's giving some tingles up the leg Froglips Says:
March 26th, 2009 at 10:02 am
“I have been back in frog land for now 5 months,”

….Froggo…..I rather envy you…Paris?….I envy you even more…when Britney drops her draws it’s all over prime news but it’s no more relevant than the doings of the EP which is a talking shop…..The fact is all across Euroland they have powerful and interventionist govt’s and as long as that is the case the EP is largely irrelevant…..even if Mr Hannen gets his 15 minutes of fame and it’s giving some tingles up the leg

]]> By: gnomic http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157326 gnomic Thu, 26 Mar 2009 18:23:38 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157326 So, essentially they are gambling with taxpayer money on taxpayer-guarenteed assets, essentually re-leveraging using different instraments with no risk. And taxpayers are getting screwed twice, perhaps 3 times if they need more money. OH WAIT, it seems they do: Moody’s Downgrades BofA, Wells Fargo Saying that it expects both banks to need further “systemic support” — codespeak for government funding — Moody’s Investors Service on Wednesday cut key debt and bank ratings for both Bank of America Corp. (BAC: 7.52 -2.34%) and Wells Fargo & Co. (WFC: 15.90 -3.17%). In particular, Moody’s cut Bank of America, N.A.’s bank financial strength rating (BFSR) to D from B-, while Wells Fargo Bank N.A.... via http://www.housingwire.com/2009/03/26/moodys-downgrades-bofa-wells-fargo-2/ So, essentially they are gambling with taxpayer money on taxpayer-guarenteed assets, essentually re-leveraging using different instraments with no risk. And taxpayers are getting screwed twice, perhaps 3 times if they need more money. OH WAIT, it seems they do:

Moody’s Downgrades BofA, Wells Fargo

Saying that it expects both banks to need further “systemic support” — codespeak for government funding — Moody’s Investors Service on Wednesday cut key debt and bank ratings for both Bank of America Corp. (BAC: 7.52 -2.34%) and Wells Fargo & Co. (WFC: 15.90 -3.17%). In particular, Moody’s cut Bank of America, N.A.’s bank financial strength rating (BFSR) to D from B-, while Wells Fargo Bank N.A….
via http://www.housingwire.com/2009/03/26/moodys-downgrades-bofa-wells-fargo-2/

]]> By: DeDude http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157311 DeDude Thu, 26 Mar 2009 17:39:17 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157311 I am not sure that a 30 cents on the dollar investment is bad. It all depends on the properties that are backing the paper. What it really shows is why we should put a firewall between FDIC insurred banking, insurance and investment banking - and never let any entity within these 3 types of businesses become to big to fail. I am not sure that a 30 cents on the dollar investment is bad. It all depends on the properties that are backing the paper. What it really shows is why we should put a firewall between FDIC insurred banking, insurance and investment banking – and never let any entity within these 3 types of businesses become to big to fail.

]]> By: Guitoux http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157264 Guitoux Thu, 26 Mar 2009 15:45:31 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157264 By buying a few "toxic assets" at inflated levels, there's not doubt they'll be able to justify selling a good number of their "toxic assets" via PPIP at the same inflated levels. By buying a few “toxic assets” at inflated levels, there’s not doubt they’ll be able to justify selling a good number of their “toxic assets” via PPIP at the same inflated levels.

]]> By: Transor Z http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157259 Transor Z Thu, 26 Mar 2009 15:37:31 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157259 @ Bruce: Thanks for the clip. Dude was riding a righteous nautical metaphor, wasn't he? -- but when you've got to provide an aside to translate that "caulking" = non-deficit spending... well, whatever. British political rhetoric in times of crisis is still the gold standard, IMO. That one makes the cut for the opening credits montage of the Oliver Stone film depicting this era. @ Bruce:

Thanks for the clip. Dude was riding a righteous nautical metaphor, wasn’t he? — but when you’ve got to provide an aside to translate that “caulking” = non-deficit spending… well, whatever. British political rhetoric in times of crisis is still the gold standard, IMO.

That one makes the cut for the opening credits montage of the Oliver Stone film depicting this era.

]]> By: Kyle http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157251 Kyle Thu, 26 Mar 2009 15:27:17 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157251 Dan, if the gov't doesn't own any CDSs, but wants to sell them, it would have to buy them first. So the only way to sell them without buying them is writing them. Anyway my point is mainly that buying/selling CDS will have no affect on underlying asset value. If you're trying to learn more, the Wikipedia article on CDSs is a good start, I found it very informative. Dan, if the gov’t doesn’t own any CDSs, but wants to sell them, it would have to buy them first. So the only way to sell them without buying them is writing them. Anyway my point is mainly that buying/selling CDS will have no affect on underlying asset value. If you’re trying to learn more, the Wikipedia article on CDSs is a good start, I found it very informative.

]]> By: Aristotle http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157226 Aristotle Thu, 26 Mar 2009 14:37:44 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157226 C & BAC buy 'em for .30 on the dollar and sell them to the gubmint for .90 on the dollar! C & BAC buy ‘em for .30 on the dollar and sell them to the gubmint for .90 on the dollar!

]]> By: Froglips http://www.ritholtz.com/blog/2009/03/buying-toxic-assets-with-bailout-money/comment-page-1/#comment-157211 Froglips Thu, 26 Mar 2009 14:02:45 +0000 http://www.ritholtz.com/blog/?p=22545#comment-157211 Otto, I have been back in frog land for now 5 months, 60% of my life has been in the US, the rest in Europe, by that I am very familiar with both. I agree with you that most of the time you don't hear much about the E.U parliament but when a splash is made it goes all over prime news. European elections are up this June, it will mostly be a referendum on the different governments, will be really interesting to see the shape of it. I suspect to see more socialists and nationalists in there. Otto,

I have been back in frog land for now 5 months, 60% of my life has been in the US, the rest in Europe, by that I am very familiar with both.
I agree with you that most of the time you don’t hear much about the E.U parliament but when a splash is made it goes all over prime news.
European elections are up this June, it will mostly be a referendum on the different governments, will be really interesting to see the shape of it. I suspect to see more socialists and nationalists in there.

]]>