After briefly reviewing the Public Private Investment Program White paper that I found on the US Treasury Departments website I was left with more questions than answers. What I found was there is no fine print or "real" details into how this program will work other than the broad ideas of its framework. Here are the following questions I would like some answers too:
- How did they come to assume that the markets will be stable? It appears it is wishful thinking rather than academic analysis.
- How does a repackaging the same Toxic assets to the same current owners solve the problem? It’s a attempt at a free lunch that I believe no one will have a appetite for because the current owners know they have no value and unless the government gives them zero liability to hold them it will fail.
- Why does the government think that using the free markets to value these recycled toxic assets will provide a nominal value that will minimize tax payer risk when it is these markets that :
1) Gave value to the worthless products
2) Are socializing the loses.
- What is the framework for the oversight and how will they control for conflicts of interest?
- Why don’t they have the exact requirements and structure of the Legacy Loans Program? What does subject notice and comment rulemaking? Who will be the rule maker? When will it happen? Will it be released on a Friday 11:59pm at night? How does a program move forward with no details? You could not run a small business this way let alone a recovery of financial markets.
- The whole program is a attempt at improving confidence! That will never happen without anyone, especially Wall Streets, ability to understand how the program will work.