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Get ready for the Toxic Asset Loan Factory. TALF, the U.S. government's effort to boost consumer lending, finally launches next week. The program - officially the Term Asset-Backed-Securities Loan Facility - is targeted at restarting the market banks use to fund credit-card, auto and other consumer loans. But...
Critics contend the plan does too much to stimulate demand for top-rated securities and not enough to draw in buyers for riskier bonds that have always been harder for banks to sell. "We need to get credit buyers back into the market," says John McElravey, director of asset-backed...
At the heart of the program - and the biggest cause of complaints - is an effort to reignite the process by which most banks get the money they use to make consumer loans. To fund credit-card, auto and education lending, banks typically gather up loans they already have made and...
And that's what causes the problem. Every securitization deal creates some AAA-rated bonds and some lower-quality debts. In a typical credit-card securitization, as much as 15% of the bonds created will have ratings lower than AAA. And the government plan does nothing to help banks get...
As bubbles do, this one burst. While Japan's bureaucrats dithered, failing to face up to the crisis in the financial system, the economy went into a long "lost decade." The stock market plunged, then limped, then plunged again. (The Nikkei index is down 82% from its peak in 1989...