Secretariat
09-18-2008, 04:26 PM
The market responded well to Paulsen's suggestion of a Resolution Trust Corp. via the 80's. My question is what is the impact of this on the taxpayer. The last time in the 80's, the NY Times estimated the taxpayer cost at 289 million, and adjusted for inflation today puts the price tag today in the billions. Just curious how others feel about this as a solution, and incurring more taxpayer government debt to save poor investments.
http://news.yahoo.com/s/ap/20080918/ap_on_bi_st_ma_re/wall_street
"NEW YORK - Wall Street had a stunning late-session turnaround Thursday, shooting higher and hurtling the Dow Jones industrials up more than 400 points after a report that the federal government may create an entity that will take over banks' bad debt.
The report on CNBC said Treasury Secretary Henry Paulson is considering the formation of an entity like the Resolution Trust Corp. that was set up after the failure of savings and loan banks in the 1980s.
Investors were cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the real estate debt that has hobbled financial institutions and led to the intense volatility in the markets this week.
If there's an RTC-like entity, "it's going to take a lot of the bad debt off the balance sheets of these companies," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. That would alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again. But Fullman noted, "the devil's in the details."
http://news.yahoo.com/s/ap/20080918/ap_on_bi_st_ma_re/wall_street
"NEW YORK - Wall Street had a stunning late-session turnaround Thursday, shooting higher and hurtling the Dow Jones industrials up more than 400 points after a report that the federal government may create an entity that will take over banks' bad debt.
The report on CNBC said Treasury Secretary Henry Paulson is considering the formation of an entity like the Resolution Trust Corp. that was set up after the failure of savings and loan banks in the 1980s.
Investors were cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the real estate debt that has hobbled financial institutions and led to the intense volatility in the markets this week.
If there's an RTC-like entity, "it's going to take a lot of the bad debt off the balance sheets of these companies," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. That would alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again. But Fullman noted, "the devil's in the details."