TARP me TALF me, anyway you want me

The stock market was up almost 500 points today on a new plan to save the financial system. Let's see, according to US Treasury, they will use funds from the Term Asset-backed Securities Loan Facility (TALF) to purchase troubled assets from the U.S. banks to give them relief on their declining capital ratios and subsequent margin calls. It doesn't have a catchy name yet. Currently, they have labeled it Legacy Securities Program.

Too bad. It should have a catchy name. So, let's think! Commingled Repurchased Asset Program? CRAP? Nah... Hmmm... So, they now have a program that is buying troubled assets, and it provides some relief. PTAR... No... Let's see, we're putting $500-$1,000bn of taxpayer money into purchasing troubled assets in order to take them off the books of the banks in hopes of making a profit out of the whole mess. How about, Troubled Asset Relief Program. Perfect! TARP!

Whoops, sorry, we have a TARP program. That acronym was already used for a program that was inacted in October 2008 specifically designed to buy troubled assets from the U.S. banks to give them relief on their declining capital ratios and subsequent margin calls, but instead was bastardized to be used to throw money around in hopes of stabilizing the economy, and stiff-arming financial institutions to lend to already overstreteched consumers so they could bid-up already inflated assets they couldn't afford while simultaneously criticizing these same financial institutions for not being financially smart and healthy. [long exhale]

This program is what TARP was supposed to be! This was the original plan! WTF took five months to figure it out! Look back at my postings in October 2008, and you will see the same ideas: get the bad assets off the books of the banks. Put them in hands of investors with long time horizons (like the U.S. Treasury) and no capital ratios to maintain. Banks will be free to make GOOD loans again, and at the end of the day, the investor in troubled assets probably makes some money.

To solve the problem of pricing and managing the assets, they seek help from private sector - yes, those same hedge fund evil-doers who have become the butt of Congressional babbling for the last six months. Although there are profits to be made, especially when the FDIC is providing 6:1 financing, I say "good luck" to the bastards who participate. I'll blog good things on your behalf when you too are called in front of Congress to explain how you made "millions" off the taxpayers generousity and dragged through the mud on CSPAN. And that's if you make a profit. God forbid you lose "our" money...