Posted by
m0t0r1zed on Tuesday, September 30, 2008 6:51:13 AM
i prefer the treasury selling insurance to banks instead of buying up all of the bad loans. also, all of the talking heads going on about how we lost a trillion dollars on the market ... so if it goes back up 777 pts, then did we just make a trillion? gimmie a break .... =P
excerpt of article in forbes ...
House Republicans negotiated a section into the bill that would establish an insurance program for toxic assets. Instead of selling troubled mortgage-backed securities to the Treasury, banks could instead purchase insurance from the Treasury on the assets.
Eric Cantor, R-Va., the chief deputy whip for House Republican, told Forbes.com the insurance program was a "terrific alternative," but the program was not strong enough in the legislation. "That sort of cost us some votes, the fact that there wasn't more teeth in that," said Cantor, who was one of the originators of the insurance scheme.
In the legislation that failed Monday, the secretary of the Treasury was given the option to decide whether to buys the assets or apply the insurance program. Cantor is pushing a more muscular version of the insurance program that would require affected firms to pay insurance premiums on mortgage-backed securities rather than have the Treasury Department buy them directly.
Cantor said that under the failed bill, firms would probably be subject to one option or the other, since the government wants to prevent businesses from gaming the system by unloading their troubled assets on taxpayers, then buying insurance for the good assets, which presumably could eventually be re-sold at a higher rate.
edit: hmm, then again, the gov't will just end up taking the premiums that they collect and spend it instead of actually setting it aside. -_-