Govt. Determined to Prolong Recession

I'd expect banks to just sit on these assets for years - the gov't has made doing so the revenue maximizing move. Why would anyone go to the auction? Is an outside party really going to value these assets higher than they do?

I can't believe the incompetence of this government.

interesting video. drexel, i don't think this is such an easy issue... calling the whole government incompetent is a bit of a broad stroke, no?

so why is it assumed that the rules would allow banks to value these assets at 50 cents on the dollar? does anyone know the specifics of the plan / requirements of the banks when valuing these assets? how much leeway are they actually given or are there strict guidelines based on the future cash flows of these assets? and why is it assumed that the treasury plan will yield 20 cents?

I can see the inherent contradiction here between these two plans but this video was really a broad stroke without going into specifics of how much leeway is given and the rationale behind Congress pushing for this in the face of the plan from the Treasury.

we can take the easy road and call them all idiots but I think that we can have more constructive and detailed debate here.

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Fair enough Patrick. Do I think the US government are idiots? No, I know a lot of them and they are among the most intelligent people I know (including Barney Frank, who is also rather nice once you get to know him). However, being intelligent does not make someone an expert on every subject, and that is a big problem here. Congress is shooting from the hip, and they are not firing with a cohesive plan. I don't think ending mark-to-market is a great idea, but it has its merits. However, coupled with the legacy asset purchase plan (or whatever it is called), it makes the government seem like they have no clear direction or plan (which I doubt they do). There are a number of reasons I'm frustrated with our government, and incompetent might not be fair. However, I think that many of our representatives have betrayed a lack of understanding of the historical context of their decisions, as well as the long run ramifications of taking certain actions. In polisci 101 they begin hammering home to you the concept of tyranny of the majority, and I have a hard time fathoming how Senators can have forgotten that.

Is that at all related to this topic though? Honestly, it isn't. My reasons for thinking end mark-to-market is a bad idea is because it seems the basest form of hypocrisy - screaming for regulation with the one hand, then giving banks free reign in a pasture of moral hazard with the other. As you say though, I should read the relevant ruling and more informed commentary before I pass judgment (though for what it's worth, the FT thinks it's a horrid idea as well)