Here is a list of all the proposed programs proposed.
—Up to $700 billion to buy assets from struggling institutions. The plan is aimed at sopping up residential and commercial mortgages from financial institutions but gives Treasury broad latitude.
—Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.
—The Fed committed to make unspecified discount window loans to financial institutions to finance the purchase of assets from money market funds to aid redemptions.
—At least $10 billion in Treasury direct purchases of mortgage-backed securities in September. In doubling the program on Friday, the Treasury said it may purchase even more in the months ahead.
—Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac.The Treasury announced they would increase purchases up to the newly expanded investment portfolio limits of $850 billion each. On July 30, the Fannie portfolio stood at $758.1 billion with Freddie's at $798.2 billion.
—$85 billion loan for AIG, which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.
—At least $87 billion in repayments to JPMorgan Chase [JPM 47.05 --- UNCH (0) ] for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers [LEH 0.2151 --- UNCH (0) ]. Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.
—$200 billion for Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.
—$300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.
—$4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
—$29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.
—At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.
7 comments:
Nice and long list....
Lehman was not included as the government wanted to see if the market can handle a shock. It was a bit expensive to test the markets.
And the explanation:"Lehman was not a shock" is not true as S&P just gave a rating of A on the 10th September (3 working days before chapter11)
Lehman was not included because too many of their political contributions were marked D rather than R.
As shareholders in all these new companies, will the U.S. govt. be in a position to enjoy the fruits any potential profits if and when down the line any of these companies turns around? Or do we just get the pleasure of swallowing all of the risk w/ none of the reward? Also, has there been any discussion about partial bailouts - that is, just enough to keep these companies afloat, but not so much as to completely wipe out their debts? For all the crap mortgages, is anyone considering simply renegotiating the loan terms so the homeowners are able to make payments? Even though the banks would still be losing money, it would be less than if the loans went into total default?
Yeah, but your number is a minimum. The $700 billion figure being so casually tossed around is merely a balance sheet limit in the original proposal.
In other words, Paulson would be given authority to buy $700 billion in assets (or junk), sell them to Wallstreet at a loss to taxpayers, and then do it again. And again.
Friends of Paulson win. Non-friends and taxpayers of Paulson lose -- as already has been happening.
Where's the best place to keep one's money in these times? Is is logical to expect the stock market to become inflated with this infusion of rescue cash and start climbing again? If inflation takes place, aren't bonds devalued? Where can you go to protect the value of your money when so much money is being created out of the blue?
$700 Billion Dollar Bailout Good For Economy
WASHINGTON (AP) -- It's the largest government bailout in U.S. history and two days after it was introduced to the Americans paying for it, the proposal is still largely a mystery.
Among the unanswered questions: How will the government mop up the bad mortgage debt on banks' books, who will run the process and how much will it cost?
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Key elements of the plan remain in flux as behind closed doors Democrats demand modifications that would provide more help for ordinary Americans in return for bailing out the country's financial giants.
We are SOOOO Screwed...
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