Reply #9: Go here. Read Geithner's drivel for yourself.

[ozymandius]

My Plan for Bad Bank Assets

...
Together, actions over the last several months by the Federal Reserve and these initiatives by this administration are already starting to make a difference. They have helped to bring mortgage interest rates near historic lows. Just this month, we saw a 30% increase in refinancing of mortgages, which means millions of Americans are taking advantage of the lower rates. This is good for homeowners, and it's good for the economy. The new joint lending program with the Federal Reserve led to almost $9 billion of new securitizations last week, more than in the last four months combined.

However, the financial system as a whole is still working against recovery. Many banks, still burdened by bad lending decisions, are holding back on providing credit. Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed. With these pressures at work on bank balance sheets, credit remains a scarce commodity, and credit that is available carries a high cost for borrowers.

....

The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

Here is what sounds like the "gotcha" clause.

The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

What capital from private investors is he talking about? Financing for this venture comes from the FDIC, the Fed and the Treasury.

May we split hairs here? He is talking about backstopping these loans to buy worthless securities with taxpayer government financing. Yet, despite the worthless nature of these assets (otherwise someone like Warren Buffett would have gobbled them up already if they were worth anything) we, the taxpayers, are expected to share some of the profits from being on the hook for these deals? C'mon. Madoff had a better marketing campaign than this!

Edit to add this close:

These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

In other words: Bring all suckers!