Warning: Use of undefined constant ddsg_language - assumed 'ddsg_language' (this will throw an Error in a future version of PHP) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/sitemap-generator/sitemap-generator.php on line 44

Warning: Cannot modify header information - headers already sent by (output started at /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/sitemap-generator/sitemap-generator.php:44) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/wp-super-cache/wp-cache-phase2.php on line 1197
Neel Kashkari | Bank REO Real Estate
Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

Investors ready to buy U.S. government-backed toxic assets?

March 11, 2009 by · Leave a Comment
Filed under: Opinion 

Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

If you actually analyze the press release, its a load of crap (pardon me) but that is what it is.   The basis of this approach is instead of discovering the “real” price of these “toxic” assets, we would rather have the government provide financing for assets that are worth very little if anything to investors that would not normally purchase these if they did not have government financing.  Here is my favorite quote “Neel Kashkari, who administers the Treasury’s $700 billion Troubled Asset Relief Program, told a U.S. House of Representatives Oversight and Government Reform subcommittee that without financing private investors would pay such low prices for the assets that bank balance sheets would be hurt.”  Let the balance-sheets be hurt, they made bad choices and this is how a market economy deals with them.

News:

A U.S. Treasury-led effort to soak up toxic assets from bank balance sheets could draw in private investors with the right government financing, a senior Treasury official said on Wednesday.

Neel Kashkari, who administers the Treasury’s $700 billion Troubled Asset Relief Program, told a U.S. House of Representatives Oversight and Government Reform subcommittee that without financing private investors would pay such low prices for the assets that bank balance sheets would be hurt.

Read more

U.S. Treasury to invest in `healthy’ banks, Neel Kashkari states

October 13, 2008 by · Leave a Comment
Filed under: Industry News 

Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

I wonder how Neel will define “healthy”. Last time I checked, all major commercial and investment banks were leveraged between 15-40 for every dollar of deposit. Along with that fact, no one is talking about the elephant in the corner of the room…..Derivatives. With the estimates between $516 trillion and $1.44 Quadrillion outstanding, I am not sure how they are going to work those out.

When Lehman, Bear Sterns and Fannie/Freddie failing or being nationalized, that has triggered quite a bit of these instruments to go from notional value to actually value. How is going to pay these out or will the counter-parties default? That will lead to a larger loss of confidence in the market and will continue to put pressure on lending. If the government backs these unregulated bond insurance contract then it puts its own credit at risk. Marc Faber said the next bubble to burst will be U.S. treasuries once interest rates have to rise to combat inflation and then we are in a situation where we can not keep up with the ballooning interest payments. Something has to give at some point, its like a full-time job keeping up with all these developments that have various implications.

News Piece:

Neel Kashkari, the U.S. Treasury official overseeing the $700 billion rescue of the financial system, said government equity injections will be aimed at “healthy” firms.

“We are designing a standardized program to purchase equity in a broad array of financial institutions,” Kashkari, who heads the department’s Troubled Asset Relief Program, said in a speech in Washington. “The equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions.”

Read more


Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c01/h08/mnt/12575/domains/bankreorealestate.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524