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Old 06-09-2009, 10:33 PM
Gravy Gravy is offline
Join Date: Feb 2008
Location: Cincinnati, Ohio
Posts: 50
Default Re: BloggingTrolls (Ezra Klein & Will Wilkinson)

Possibly the failure of the PPIP - whose demise I believe is not as final as this diavlog assumes - was related to the decision not to allow banks to bid on their own or similar assets. With the strong leverage provided by the non-recourse loans coming from the FDIC, banks may have been strongly interested in overpaying heavily for them, to come closer to book value as Ezra mentions, and then write off their 7% (I believe) and come out with the assets marked down to fair market with someone else paying for 93% of the ride down from book value. But if you need more "honest" investors, all they see at close to current book values is a great chance of losing 100% of their 7% investment. You have great leverage, but if the program absolutely needs people to pay above market prices for the banks to be interested in selling it is never going to get going.
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