STRAW BUYERS STIMULUS PACKAGE - Banks win, YOU loose

Treasury secretary Tim Geitner has just released the details of a program that will allow banks to make money on the TOXIC ASSETS. 

Step 1 - Bank writee down assets to a level that the accountants can live with (say $60 million) but still overstates their value buy at least $10 million. 

Step 2 - Bank finds a STRAW BUYER that is willing to overpay for the TOXIC ASSET pool.

Step 3 - Bank lends $5 million to STRAW BUYER who proceeds to receive $5 million from FED and $50 million from FDIC.  Togeter they buy the pool for $60 million

Step 4 - STAW BUYER only generates $45 million from the sale of the TOXIC ASSETS.

Step 5 - Bank writes off the STRAW BUYER $5 million loan (instead of $15 million that would have been written off if they would have sold the pool direct, FED LOOSES $5 MILLION and the FDIC looses $5 million.

Now change the numbers so that the bank has already written down the pool to $55 million and the STRAW BUYER still pays $60 million for the pool.  Now the bank picks up the initial $5 million profit to offset the later $5 million loss on the STRAW BUYER loan.  The FED and FDIC each loose $5 million.

BANKS WIN - FED AND FDIC GET HOOD WINKED - TAXPAYERS GET SMOKE MIRRORS AND HIGHER TAXES!

Have a nice day!