With financial markets in flux and a massive government rescue package in the works, financial reporter and New York Times columnist Gretchen Morgenson looks into what’s involved in the nearly $700 billion deal.
One central concern: The way troubled banks’ assets get valued when the federal government buys them. “Depending on how [the bailout program] is operated, and how the assets are valued before taxpayers are forced to buy them, it could bloat our final bill for this mess while benefiting the very institutions that got us into it,” Morgenson wrote in a recent column.
Morgenson talks to Terry Gross about strategies the government might employ to value the assets taxpayers are buying from endangered institutions ”” and how regulators might earn back some of the trust they’ve lost in recent weeks.
[i]One central concern: The way troubled banks’ assets get valued when the federal government buys them.[/i]
Indeed. If these assets are marketable, then they would otherwise be purchased at market prices. Why does the federal government, with its checkbook underwritten by taxpayers, have to buy these assets? The answer is the banks and the government are committing a giant fraud. These assets are worth nowhere near what they want the taxpayers to pay for them. And we are $9 trillion–with a T–in debt! Do these people really think you can just print money whenever you need it?
The kicker quote about a bailout: “That’s privatising gain, socialising losses” at 31:15 in the interview.