"Bad Bank" Dies/Private Equity Heist Lives!

Surprise!

The bad bank is now dead according to CNBC:

"The Obama administration’s wide-ranging plan to stabilize the financial system no longer includes creating a "bad bank" but will still contain measures to buy up toxic assets from financial institutions, according to a source familiar with the plan.

In addition, funding for the bank-rescue plan is unlikely to exceed the $350 billion currently available under the TARP, this source said.

A Treasury Department source said the plan was essentially complete with only minor “tweaks” being applied. The plan will be presented to members of Congress this evening, according to sources.

There’s been great speculation in recent days about both the measures and terms involved in the bank-rescue plan. In particular, there’s been great uncertainty about the inclusion of the "bad bank" concept, where the government would set up an aggregate bank and buy up billions of dollars of bad debt from banks.

At the moment, the idea of involving private capital in the purchase of bad assets “is gaining speed,” said the source, who is familiar with the discussions. In that way, the government might simply encourage firms to buy the assets or provide some sort government subsidy covering some of the costs.

“You don’t need as many dollars," the source explained, and “the market sets the price.” Such a model would also reduce the likelihood of bank nationalization by demonstrating that the “company is strong enough to attract private capital."

The latest version of the plan no longer addresses any immediate aid to insurance companies with thrift units that have applied for capital injections under the existing TARP. That idea appeared to be gaining support on Saturday.

In addition to asset purchases, the government will continue capital injections into needy firms as well as the "ring fence" concept recently applied to Citigroup and Bank of America which provides guarantees and insurance to cover bad assets remaining on firms’ books."

My Take:

Well its just about official ladies and gentlemen. We are about to get robbed for a second time by Wall St only this time its been approved and delivered by both the Treasury and the Federal Reserve. This pretty much confirms that what I wrote about over the weekend was all pretty accurate.

Here is the simple translation of the article above folks: This TALF will allow hedge funds/Private equity to swoop in and cherry pick whats left of the debt carcass, buy and hold it at a large profit until it inevitably plummets in value like every other "garbage" debt asset, and then dump it back onto the governments balance sheet. Or in other words: They dump it back ontoOU!

So essentially the TALF is the modern version of a "bad bank" except this time it will be run by private equity versus the government. However, this "bad bank" will be different than any other in history. This will become the first "bad bank" that doesn't lose money because it's losses are taken by the taxpayer!

Don't you just love the "change" that has occurred in Washington? The 2 million people that showed up at Obama's inauguration were all duped. He and his administration are just as crooked as all of the rest IMO. The fact that they are not only allowing but endorsing this program is beyond belief!

Do we now elect crooks to run our government? Is what its come to? This is a total heist at the expense of the taxpayer via a government guarantee.

Wall St now gets a second chance to line their pocket with gold while we sit here and continue to lose our jobs and wallow in debt. This is MADDENING!

This sticksave will do nothing to help our economy, and it also fails to produce true price discovery on garbage that sits on the banks balance sheets. Private equity will agree to gobble these assets up via leverage at a bloated price, and will then dump them onto the government once they make their money. The government/taxpayer then ends up with thousands of worthless assets that our grandchildren will be stuck paying for.

The reality here that the government refuses to admit is the value of these assets is ZERO folks. Maybe .20 on the dollar in some instances. This is basically a back door "bad bank" that does nothing but kick the can down the road. Its a total SELLOUT!

I think Turbo Timmy realized the bond market wasn't going to allow him to create a financial vehicle/bad bank that allowed him to put all of this garbage directly onto the governments balance sheet. If he had tried the "bad bank" yields would have soared.

So what does this slimeball decide to do instead? He creates a pot of gold for private equity by offering them sweetheart deal . At the same time, this deal also allows him to create a "backdoor" that enables him to get these assets off the banks books and onto the governments balance sheet. How does this occur? Private equity will force the Treasury to make good on their guarantee subsidy by forcing them to take back the assets once they are in the toilet and worthless. Pretty slick there Turbo!

Bottom Line:

So whats the end result with this deal? More fraud, zero transparency, more money for the pigmen, and no help for Main St. Don't ya just love capitalism?

Its time to stand up to these financial fraudsters. The fact that a DEMOCRATIC PRESIDENT allowed Wall St to gorge themselves on another pile of money while the common man struggles is beyond belief. I am beginning to believe that the values and beliefs of both parties have completely vanished!

There are no longer Democratic and Republican parties in Washington anymore. The "Moneywhore" party is now in power and they own every seat in power.

The futures are red right now and I hope this market tanks on the news. In fact, if it wasn't for my fellow investors, part of me wishes the market would go to zero.

Perhaps only then wwill we ever rid ourselves of this obsession with greed. We better find another cure for this obsession because greed is about to take down our financial system.

DOW 1400? It doesn't seem so far fetched anymore.