R.i.p. Ppip?

[LargoWinch]

You went away with not much of a peep...

WASHINGTON -- A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter.

The Legacy Loans Program, being crafted by the Federal Deposit Insurance Corp., is part of the $1 trillion Public Private Investment Program the Obama administration announced in March as a way to encourage banks to sell securities and loans weighing on their balance sheets to willing investors.

...

From the WSJ.

[we_are_toast]

Re: R.i.p. Ppip?

It ain't over till it's over.

Sheila Blair
“I think there have been separate issues about whether banks can be buyers on other bank assets and I think that’s an issue that we continue to look at.”

[Diarmuid]

Re: R.i.p. Ppip?

Sets the mind wondering as to why?

The so called impaired assets are not only toxic but stink to high heaven of fraud?

The assets are not even worth 6 cents on the dollar?

The main players on wall street have already been fully capitalised by the FED via the circle Money theory espoused by some here and wait in the sidelines with cash in hand making PPIP redundant?

The PPIP is not opaque enough and the banks are afraid if they game the system via SIVs and connected hedge funds it will come out?

Hedge funds managers and financiers in the eligible funds and banks have suddenly developed a deep sense of morality? :eek:

All, some or none of the above?

[Slimprofits]

Re: R.i.p. Ppip?

nice graph from the WSJ article:

U.S. banks have a $168 billion reason to shun a government program designed to strip toxic loans from their books.

That’s how much lenders could lose if the banks sell loans into the Public-Private Investment Partnership at market prices instead of their balance-sheet valuation, based on estimates in regulatory filings. It would erase the $75 billion that banks were told to raise by the Federal Reserve to withstand a deeper recession.

The imbalance helps explain why the Legacy Loans program, the Federal Deposit Insurance Corp.’s side of PPIP, is “stuck in the rut on the side of the road,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama.

http://www.bloomberg.com/apps/news?p...K6w&refer=home

a $92 billion!!! difference. How about those stress tests?

Now it is time for Plan.....G aimed at saving the Too big to Fail.

[BadJuju]

Re: R.i.p. Ppip?

Now it is time for Plan.....G aimed at saving the Too big to Fail.

I think we have it all wrong here. We need to stop maligning these entities for being too big to fail. We need to look at the under-performers, those that failed to be big!

[ASH]

Re: R.i.p. Ppip?

Sets the mind wondering as to why?

Relaxation of the mark-to-market rule means there is no longer a pressing need to get "bad" assets off balance sheets. Instead, the banks can just estimate a higher value, and voila -- no capitalization problem. A bank that owns a toxic asset, and is free to estimate its value, will always assign a higher value than could be gotten in the market.

[drumminj]

Re: R.i.p. Ppip?

Yet the financial shares haven't given back the gains that they got when PPIP was announced.

It really is interesting to watch closely and see what moves the markets...and what doesn't.

[cjppjc]

Re: R.i.p. Ppip?

Yet the financial shares haven't given back the gains that they got when PPIP was announced.

It really is interesting to watch closely and see what moves the markets...and what doesn't.

Except what moves the market on one day doesn't on another.

[Diarmuid]

Re: R.i.p. Ppip?

Relaxation of the mark-to-market rule means there is no longer a pressing need to get "bad" assets off balance sheets. Instead, the banks can just estimate a higher value, and voila -- no capitalization problem. A bank that owns a toxic asset, and is free to estimate its value, will always assign a higher value than could be gotten in the market.

That certainly explains the capital issue but still wondering why there has been no take up in the program on whats supposed to be a no brainer if your on the private side of the PPIP in regard to risk v profit?

[Spartacus]

Re: R.i.p. Ppip?

f) none of the below. The banksters have thought of an even better, as yet unknown to us way to shear the sheeple. "better" = (more & bigger payoffs for banksters, more & bigger losses for taxpayers)

Sets the mind wondering as to why?

The so called impaired assets are not only toxic but stink to high heaven of fraud?

The assets are not even worth 6 cents on the dollar?

The main players on wall street have already been fully capitalised by the FED via the circle Money theory espoused by some here and wait in the sidelines with cash in hand making PPIP redundant?

The PPIP is not opaque enough and the banks are afraid if they game the system via SIVs and connected hedge funds it will come out?

Hedge funds managers and financiers in the eligible funds and banks have suddenly developed a deep sense of morality? :eek:

All, some or none of the above?

[Spartacus]

Re: R.i.p. Ppip?

It was over long ago.

all the battles were won and lost,
all the long knives were inserted where they needed to go,

all of it, signed, sealed and delivered, long ago.

All that remains is for us to be told the final score, the total poundage of our flesh to be rendered.

It ain't over till it's over.

(submitted for your consideration in a moment of cynical despair)

[ASH]

Re: R.i.p. Ppip?

That certainly explains the capital issue but still wondering why there has been no take up in the program on whats supposed to be a no brainer if your on the private side of the PPIP in regard to risk v profit?

You need both a buyer and a seller to have a transaction. The PPIP is a no-brainer for the buyers, but the change in valuation rules means there are no sellers, because they would have to sell their junk for a value less than they can invent by mark-to-myth. In other words, mark-to-myth means that bad securities no longer are burning a hole in banks' balance sheets, so the cost to hold onto them is basically zero -- and the owner can hold onto them indefinitely, hoping they'll eventually be worth something. After all, buyers in PPIP were expected to make the same wager: buy the securities and hope they were worth something. The difference is that even though the risk/reward balance for private buyers in the PPIP was heavily skewed in favor of the buyers, it remains that the buyers still had something at risk. In contrast, the original owners of the bad securities now have nothing at risk to make the same wager.

[Diarmuid]

Re: R.i.p. Ppip?

You need both a buyer and a seller to have a transaction. The PPIP is a no-brainer for the buyers, but the change in valuation rules means there are no sellers, because they would have to sell their junk for a value less than they can invent by mark-to-myth. In other words, mark-to-myth means that bad securities no longer are burning a hole in banks' balance sheets, so the cost to hold onto them is basically zero -- and the owner can hold onto them indefinitely, hoping they'll eventually be worth something. After all, buyers in PPIP were expected to make the same wager: buy the securities and hope they were worth something. The difference is that even though the risk/reward balance for private buyers in the PPIP was heavily skewed in favor of the buyers, it remains that the buyers still had something at risk. In contrast, the original owners of the bad securities now have nothing at risk to make the same wager.

Thank you for the succinct explanation.