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In response to
"What details do you want? That's what I keep asking?"
by
pmb
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I don't think it's too much to ask exactly how valuations were arrived at for troubled assets held on the banks' books.
Posted by
Loyola
Aug 10 '09, 11:42
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It goes to the core of the problem. Bank x has 100 million of non performing loans (lent out to commercial real estate) on its books, goes to Geithner, give me 100 million for this garbage and we will be able to continue lending out money to Joe public, to grease the system with liquidity, yada yada yada, Geithner goes; ok Mr. Bank, here's 100 million for that crap, go nuts.
Problem is, there's a property crash going on. So that 100 million of assets, really purchased through PPIP, will be worth 100 million again in about 25 years, and at today's value is worth 20 at most (in this particular example) So through the magic of accountancy (and by magic I mean downright fucking fraud) Geithner (you) is left holding an asset nominally worth 100 million when the world and its dog knows that you might as well wipe your ass with it. Meanwhile, the bank has provided liquidity to the system, right? No. Lending drops in a recession. Banks hoard the shit out of everything.
So anyway, details, How much they paid for crap, who decided how to value it, recovery prospects of said crap etc etc.
Why provide details? No. The question is; Why wouldn't they want to provide the details?
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