Left: M.H. Paulson, grandfather to the current Treasury Secretary. |
SO NOW THE PLAN to purchase mortgage-backed securities, aka 'toxic assets', is back on:
New $800 billion rescue plan includes money for credit card debt
Treasury Secretary Henry Paulson, warning that "millions of Americans cannot find affordable financing for basic credit needs," announced a major expansion of the federal bailout on Tuesday — as much as $800 billion to make mortgages and consumer credit more available and affordable.
The government will buy up to $600 billion in mortgage-backed assets...
Could it really be just 12 days (time flies when you're being pillaged) since this...
U.S. Shifts Focus in Credit Bailout to the Consumer:
Mr. Paulson said the $700 billion would not be used to buy up troubled mortgage-related securities, as the rescue effort was originally conceived, but will instead be used in a broader campaign to bolster the financial markets and, in turn, make loans more accessible for creditworthy borrowers seeking car loans, student loans and other kinds of borrowing...
Mr. Paulson conceded that he had scrapped the plan he originally sold to Congress in September, which was to have the Treasury Department buy hundreds of billions of dollars worth of illiquid mortgage-backed securities in order to free up banks to resume normal lending...
Ah, but that was back in the 12 long-ago days of yore, and now:
Under the plan announced Tuesday, the Federal Reserve plans to buy up to $100 billion in direct obligations from mortgage finance giants Fannie Mae and Freddie Mac and the Federal Home Loan Banks.
It will also purchase another $500 billion in mortgage-backed securities, which consist of mortgage loans that are packaged together and sold to investors. These securities, viewed as toxic now because so many mortgages are going unpaid, are at the heart of what's weighing down troubled banks.
So, to recap: the money that was needed now (aka October) to buy 'toxic assets' or else the world would see an economic collapse or worse was as of 12 days ago (aka November) no longer needed. But on third thought the original plan that had to be passed now so that there was no time for testimony on whether it would work or if there might be much better alternatives is needed now (aka Thanksgiving), again.
For now.
Or maybe not.
The Troubled Assets Relief Program (TARP) was 'budgeted' at $700 billion. But they've already spent at least $300 billion of that, leaving $400 billion. But according to McClatchy, Paulson's now planning on another $600 billion. So maybe it's not part of the TARP. Or maybe it's part of the TARP yet to come. Or maybe just part of the $7.4 trillion:
Fed Pledges Top $7.4 Trillion to Ease Frozen Credit
Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
So maybe the $600 billion isn't part of the TARP, maybe it's part of the $7.4 trillion. Or maybe not, maybe this is just a new another new and needed now program, like the Citibank thing:
Specifically, the government will back a $306 billion pool of troubled loans and securities largely related to the foundering residential and commercial real estate markets. After Citi absorbs the first $29 billion in losses on these securities, the government — first the Treasury Department and then the Federal Deposit Insurance Corporation (FDIC) — will step in and bear 90% of any further losses. In return, the government gets up to $7 billion in preferred Citi stock and the right to buy more shares at $10.61 — not a bargain these days, with Citi trading in the single digits, but perhaps worth more down the road. On top of that, $20 billion from the Treasury's Troubled Asset Relief Program (TARP) will be injected into the company in exchange for preferred shares that come with an 8% dividend.
Or maybe the Citibank program is part of the new program that may or not be part of the old program that was needed now but then was not needed then but now is needed now again.
Who knows?
All I know is this: I'm too dizzy to keep track anymore.
Maybe it's better to just give up, and have a nice cup of tea.