Has anyone heard if the gov't is planning on buying these Wall Street assets at "fair market value"?

[TheDoorbellRang]

I am in no way a stock market guru, but my husband does a lot with investments. He heard something on CNBC that seemed to indicate Congress might be agreeing to pay "fair market value" for these assets, which he said was completely insane. He has been rather sanguine about the bailout, likening it to the RTC in the 80's. But he just about went ballistic when he heard this. He said they should never agree to pay these idiots anything close to fair market value. Anyone know any more about this?

I keep seeing a lot on oversight, transparency, reform, etc., but not much on how we're determining what we're actually getting for our money.

[DJ13]

1. Your husband heard correctly

I've read that the same securities Lehman and Bear unloaded at .15c to .20c on the dollar will be bought for around .60c on the dollar under the Paulson plan.

It really is nothing more than a wall street welfare program.

[TheDoorbellRang]

3. He's been watching this pretty closely

In his opinion, if Congress agrees to buy the assets for "fair market value," they're idiots. Takes a lot to stir him up -- he was royally pissed.

NB -- My husband is one of the fiscal conservative Republicans who's voting for Obama (Yay!). He was leaning towards Obama before Palin, and after McCain chose her, he said it only convinced him that McCain is really a pandering fool.

[Vincardog]

2. Fair market value is ZERO nobody wants to buy this crap. That is the "Problem"

We can not allow them to reward them for forcing people to take bad loans, skimming off billions and packaging the garbage to pump up fake securities and then run off to laugh at us.

[TheDoorbellRang]

4. I agree completely

The question is, how are they determining what these assets are worth? It's all so murky that it seems almost impenetrable.

[On the Road]

5. Your Husband Might be Hearing

full value of the loans as opposed to market value.

The way I understand it's going to work is a reverse auction. The bundles of mortgages will be offered to the public at a price below full value but higher than private buyers are expected to pay. The price would gradually be reduced until someone bids or it reaches a level where the government would be the buyer of last resort. I think the specifics are going to decided case by case -- for example, a bundle of loans from CA issued during the last two years would be worth less than a bundle of older loans from a place where values have not declined as much.

Even loans that foreclose should still retain a lot of their value because the property is seized. I understand that the average loss recently has been 23%. Say it's 30% in this case. That still results in a much smaller loss than the numbers that are being thrown around.

[TheDoorbellRang]

7. That sounds better -- I think

Wish I grasped this stuff at even the most basic level. The whole thing has my stomach tied in a knot.

[Junkdrawer]

6. I'm hearing Reverse Auction:

All the banks submit their bids and lowest wins....

An just what is the motivation for bidding low? :shrug: