Steve Syre- Bailout Money

I'm glad somebody does absolutely it was a veteran though he talks about unbelievable we love Steve's site Hayes Steve good morning Tom -- a taut fabric with a high you don't. It's been taught by I had the bank's been kind of leaning on me a shot I get it cut you and I are pretty tight right we. We are okay what they're they're looking for somebody else to pay my -- and so I I mean you. Yeah call your parents a tough tough tough tough I see families it's not answer the phone it's about families and his parents at second because they know they found a second in the -- studio Todd is gonna save us all he's gonna show -- aware of the brotherhood of man that's what it's all about -- Todd. What a bunch of -- hate. So he's -- at the bus station. Ya Steve -- is dressed in story in the New York Times so misunderstood United States -- bailout. To rely -- pot on private. Money while this draws my attention tell us what's going on.

If it it is what it you know these the big. -- bank bailout plan was supposed to be rolled out there today but they decided it was going to take too much of the spotlight away from pushing the stimulus plan through the Senate and so they're holding off the -- but it appears that. It's this idea of how to try to get more bad assets off. Bank balance sheets and put it somewhere god knows where. It is in fact trying to it's evolving into a -- and it somehow try to entice private investment money to get involved in. When the government was looking at that this issue of how do you get some of these. Won't that may or may not be paying but our our our serious problem -- get them. Away from banks and someplace else that we're two big problems. One which has not been resolved is what you pay for these things that the government buys them and get them off. Off their hands that there's no real market whether it's very hard to say what these things are actually work that remains. A big problem you don't want to underpaid. Certainly and if you overpaid that creates other problems the second issue was. That there are a lot of these things out there and you know does the government really have the money. To make enough of a dent in its -- a big positive effect and I I think that is. A serious economic issues that the government had trouble solving. Another new plan appears to be well will find a way to entice privately to come in and join us on this. And -- it may or may not work but it's an interesting idea.

I think it's an interesting idea but I think that truth of it will boil about this private manually get involved Steve in my opinion. To the extent that they can guarantee in erode mind at least satisfactory that they're going to make a -- that this can be florist -- by somebody probably us in the form of a government guarantee of some sort. And a big big upside if they can make escort they'll get up the -- if they kind. They won't and then of course meet you when Todd will be gnashing out teeth sometime downstream -- Look at these thieves in the private sector they bought that you know a dime and they sold at ten dollars.

Write what you know it it's not clear how this is going to work out -- we don't nobody tells that they have now would be I think it's a work in progress but. In general I think the way that this would work is that they've been talking about as bad bank idea this entity that they -- aggregate these assets taken from banks.

That's sounds like something metal track a lot of investors. Get your shares in the bad bank.

Well it's a curtain back and you know. What did some of these private investors can buy these assets right now if they want to do and they're clearly not but what Clinton's site there is. Say that the issue is. You know we think it's worth fifty cents on the dollar right now and that's the transaction price that's going to take place. If they buy them. And we say view of the private investors you know Feinberg asset management -- put a billion dollars into the aggregate of bank and here's the deal we're going to argue that. You could make a killing of these things go up you know just 75 cents on the dollar you'll make 50% of your money. But if it goes down well you know typically out of forty cents on the dollar will you have to keep that firsthand sense but it gets worse than that. We'll take care view after that and so -- downside is limited -- big upside potentially but you do outside the -- that you're afraid of is is there's a bit but after that is cushion that the government that actually issues an insurance policy on the investment. I think that's probably the way it's gonna work which. You know again just like that the issue of what the price that you by the asset. That -- you know bit the devil in the details here it is we -- set these these markers and you know out of depending on where they are that could be a reasonable deal or not but this idea of getting private money involved into the system. Is an important issue if you go back to what feels like the old days now around 1910989. Right here Boston it was a very specific issue on a smaller scale that took place. And that was one bank of New England was pale and still a lot of banks failing at that time and a guided those people it was running the FDIC. And it was done a lot of under a lot of pressure to because the FTSE was starting to run out of my audience that we need to find a new way to inject more capital as the system. To find a way to get private money involved and so. Beat the bank -- as stale and that the bank -- essentially going out to bid and there's. Country's serious bidders that come with that appear one as bank of Boston which -- around those it has. Another one was Bank of America and the third one was point which was this cute little bank at a Providence at the time. And the way that we ended up winning was Terry Murray who was running the bank of time. Goes out and he goes and finds Henry Kravis the private equity guys and Kohlberg Kravis and Roberts and it ends up. Striking a deal in which. Kravis and up funding a lot of the fleet. Proposal and in effect getting private money into the system and this is viewed as very positively by the government. He wins the -- The bank turns around overtime we get -- big franchise. KKR Henry Kravis make a killing on their investment over a period time and everybody's happy so that's one -- one example in which injecting private money into a failing bank environment worked out for everybody.

And once upon a time way back in those happy glory days where everybody ended up with a smile on their face. He did not have the complexity of these securities which nobody really knows how to will evaluate and is very very little public information on who holds what who was what took home what's performing and what's not performing his. Is that why people thus -- I have stayed on the sidelines and have not. Replicated the example you just give us.

Well I think the complexity is a big issue nobody goes there it is there's so little transparency. So it's so hard to figure out exactly. What you would buy it be buying in what the market is for that that the second issue is is that this you know gigantic credit. -- is going on right now in which you know is the amount of yet the outstanding around the world at all kinds of forms. It is going is getting ratcheted down and down it down and you know whether we are you know halfway there or 10% of the way there. Nobody really knows and and that phenomenon ultimately -- A big effect of what the the longer term demand for these types of securities what the prices of wealthy so nobody knows that either.

This thing is -- knock -- anywhere fast to see -- missing strong leadership we need a president who can stand up and say this what's going to happen. Let's get it done leadership wherever weak leadership at the top. Agree or disagree --

I just. I think they're doing okay on this so far right you know I would give them a chance to have a plan and roll it out and you know I think.

Obama is -- he's been the got elected what November 4 this is February how many months is that. November or December or January if three months it's been since he got elected -- housing waiting for.

I think he's pushing his stimulus plan at the moment which has its own problems so. I would give him until Tuesday after that you're you're you're on.

When he I don't leader who's ready to hit the ground running on day one go I think its its positive Steve's side just signed up for the Feinberg brigade but that's not on this Wednesday he's -- and a critic. How he I listened. If it if you have to yield -- suck it up. Steve's I would that would let you go a little injured dependency is a good thing indeed threatened just.