Word: toxicants
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Dates: during 2000-2009
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...market rally over? Up through Thursday's close, stocks were up 21% over two weeks, a gain fueled by positive news from the moribund housing market, an uptick in durable goods orders, and a well received plan from Treasury Secretary Timothy Geithner to clean up the banking industry's toxic-asset mess. (Read "Banks: How Toxic Are They...
...simple explanation for this divide is that the Geithner plan - which calls for Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation to finance the bulk of up to $1 trillion in toxic-asset purchases by private investors - is a great deal for the investors and a big risk for the taxpayers. The math calls for the government to take on most of the downside risk while evenly sharing the rewards with hedge funds, money managers and other buyers. In the loan-buying program, private investors would put up 7% of the capital for a shot at close...
...once we get to the actual buying of what Treasury is gingerly calling "legacy assets" (I'm hoping for a public-service ad campaign with the slogan "It's not toxic, it's a legacy"), things may shake out much differently from what Wall Street hopes and Krugman & Co. fear. Both sides in the debate seem to expect that the asset purchases will provide nothing but benefits to the banks that sell. That's not a safe assumption. We don't yet know what private investors will be willing to pay for those once-thought-to-be-valuable legacies. With...
...value of doing this is it would clarify which banks are and which banks aren't undercapitalized," says Harvard Law professor Lucian Bebchuk, whose September proposal for toxic-asset purchases by competing investors seems to have provided a template for Treasury's plan. "It's reasonable to expect that restarting the market for troubled assets will lead us to discover that some banks are in a healthy position and will make it absolutely clear that some banks are in an unacceptable position...
...proposals, House Republicans expressed support for a step the Obama Administration has so far resisted: turning to the FDIC, or an entity like the Resolution Trust Corporation used during the savings-and-loan crisis, to temporarily take over today's failing big financial companies loaded down with toxic assets...