Sometimes the best investment is the one you didn’t make. That’s the case with one of the biggest investment pools in the country: the $700 billion Troubled Assets Relief Program, which Congress authorized last October to help combat the financial meltdown. The smartest thing the Treasury has done is to not buy troubled assets with the money. Instead, it has used most of it to buy preferred stock in banks to shore up their capital. There was lots of yowling when the Treasury wisely changed its mind in November – critics yelled "bait and switch" because the pre-Obama Congress would never have approved a plan for the government to buy ownership stakes in banks. But forgoing asset purchases has turned out to be the right decision.
TARP certainly hasn’t been run perfectly. Among other things, the Treasury has lavished subsidies on nonbanks like General Motors and American International Group, and used its authority under TARP to tell banks how to run their business and pay their staff. But this is trivial stuff compared with the problems we’d have had if the Treasury had tried to buy troubled assets from banks and insurance companies at a price both fair to taxpayers and high enough not to bankrupt the sellers.
How do I know this about a program that was never launched? By looking at the problems the Federal Deposit Insurance Corp., Federal Reserve and Treasury have run into in the course of trying to set up a public-private investment program to buy troubled assets…
The program has bogged down over questions such as whether to let banks that have gotten bailouts play this game [talk about double-dipping!], whether pay and perks of private investors would be capped, and whether it’s right to let Wall Street, which made fortunes while creating this mess, make additional fortunes cleaning it up…
For many of us, the best investment we ever made was the one we never made, such as not bottom fishing for GM or Lehman common stock. For Uncle Sam, the best investment was not buying troubled assets on his own. And that’s the bottom line…
Investors can request loans for commercial mortgage-backed securities on June 16 under an emergency program to unlock credit markets, the New York Federal Reserve said on Tuesday.
Commercial mortgage-backed securities are the latest asset class to be included in the Fed’s Term Asset-Backed Securities Loan Facility, or TALF, which aims to lower borrowing costs for households and businesses. Lowering lending costs in commercial real estate could help ease refinancings by borrowers, who are increasingly defaulting on loans for a lack of credit.
The June 16 subscription period — which will take place between 1 p.m. and 3 p.m. EDT — includes only commercial mortgage-backed securities issued in 2009.
The program may take until July or August to get off the ground, however, given the typical three- to six-month period it usually takes to create, package and sell commercial mortgage bonds, Paul Vanderslice, a managing director in mortgage trading at Citigroup Global Markets Inc, told Reuters after a panel hosted by the Commercial Mortgage Securities Association in New York…
Sorry, the comment form is closed at this time.