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Bernanke: US should pay higher prices for assets
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Sep 23, 7:52 PM (ET)
By MARCY GORDON
WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke told Congress Tuesday the government should pay more than "fire-sale" prices for the toxic assets it would acquire under a proposed $700 billion bailout plan. That could mean both higher initial costs for taxpayers and reduced returns when the assets are later resold.
Bernanke's comment was the first indication of how he and Treasury Secretary Henry Paulson are thinking about formulating the rescue plan's medicine in a way that doesn't kill the patients. Requiring banks and other financial institutions to sell troubled loans and other assets anywhere close to recent sales prices of only a few cents on the dollar could wipe out the net worth of many and lead to a new wave of bank failures.
The Fed chairman said he favors buying the assets based on their "hold-to-maturity" value, which would require an estimate to be made of what each security will eventually be worth as payments come in over the years.
http://apnews.myway.com/article/20080923/D93CO4180.html
Yeah right buy junk and pay them all the money they would make on it in 30 years into the future ?
Can anyone say finiancial rape of the USA ?
Email this Story
Sep 23, 7:52 PM (ET)
By MARCY GORDON
WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke told Congress Tuesday the government should pay more than "fire-sale" prices for the toxic assets it would acquire under a proposed $700 billion bailout plan. That could mean both higher initial costs for taxpayers and reduced returns when the assets are later resold.
Bernanke's comment was the first indication of how he and Treasury Secretary Henry Paulson are thinking about formulating the rescue plan's medicine in a way that doesn't kill the patients. Requiring banks and other financial institutions to sell troubled loans and other assets anywhere close to recent sales prices of only a few cents on the dollar could wipe out the net worth of many and lead to a new wave of bank failures.
The Fed chairman said he favors buying the assets based on their "hold-to-maturity" value, which would require an estimate to be made of what each security will eventually be worth as payments come in over the years.
http://apnews.myway.com/article/20080923/D93CO4180.html
Yeah right buy junk and pay them all the money they would make on it in 30 years into the future ?
Can anyone say finiancial rape of the USA ?