$700 B Bailout

[FRPLG]

I don't understand why we have to BUY all the bad loans. Why can't the gov't just insure the bad loans? Seems like that'd be more cost effective?

[12thMan]

Originally Posted by FRPLG

I don't understand why we have to BUY all the bad loans. Why can't the gov't just insure the bad loans? Seems like that'd be more cost effective?

Well one of the issues they're having is actually pricing the bad loans. In other words determining how much they're worth or how worthless they are. So from an accounting standpoint it's tough to add that type of asset to your sheets.

Their are all types of challenges with this crap.

[FRPLG]

Originally Posted by 12thMan

Well one of the issues they're having is actually pricing the bad loans. In other words determining how much they're worth or how worthless they are. So from an accounting standpoint it's tough to add that type of asset to your sheets.

Their are all types of challenges with this crap.

The cost of insuring the loans would almost certainly be less than 700 billion. If it costs 500b then we saved 200b. The caveat has to be that the gov't gets the properties that defaulted. Banks get thier money. The gov't gets the houses and sells them off.