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Old 02-08-2009, 08:47 PM
 
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This is a 4-minute audio piece.

The Trouble With Troubled Assets : NPR
With the Senate about to vote on the economic stimulus plan, and the Treasury Department about to overhaul the bank bailout, NPR looks at the next piece of the economic puzzle: troubled assets. They're hard — but not impossible — to value, adding to the government's challenge in bailing out banks.
Heard this on All Things Considered this afternoon - an interview with an analyst who sorts these assets out. Very interesting.

Last edited by delusianne; 02-08-2009 at 09:01 PM..
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Old 02-08-2009, 08:48 PM
 
34,990 posts, read 34,755,944 times
Reputation: 6163
Default Wall St. Firms Expected to Purchase Some Toxic Assets

http://www.nytimes.com/2009/02/09/bu...ailout.html?hp

Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution.

Administration officials said the plan, to be announced Tuesday, was likely to depend in part on the willingness of private investors other than banks — like hedge funds, private equity funds and perhaps even insurance companies — to buy the contaminating assets that wiped out the capital of many banks.

The officials say they are counting on the profit motive to create a market for those assets. The government would guarantee a floor value, officials say, as a way to overcome investors’ reluctance to buy them.
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The assets were the product of a market that grew rapidly in the past two decades, in which loans made by banks, and sometimes by others, were packaged into investment securities with varying levels of risk.

Because of the hedging of risks, some were presented as safe, even if the underlying loans were risky. When these securitized assets were being created, federal regulators declined to regulate this rapidly expanding shadow financial system.

Last edited by delusianne; 02-08-2009 at 09:00 PM..
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