1. The first try – $700b to buy all the junks from the banks with no equity stake.

“If you can’t pay your house mortgage, let us take some of the junks from your basement, than giving us a partial ownership of the house”.

2. The second try – $250b to buy equity stake (preferred shares – so it’s actually just buying bank debt, not equity). But it chose to ask for only 5% interest, and a small amount of warrant (15%) of the preferred share value.

5%, are you kidding me ? The US government can borrow at 5%. Are these banks are as sound as the government ? [no pun intended!]

The current going rate for similar deals (Warren Buffett w/ Goldman and Musubishi w/ Morgan Stanley) are 10% interest, plus warrants of 100% of the preferred shares. In Europe, the executives were sacked immediately.

This is the business-friendliest government on earth. I predict in 5 years time, some watered down version of regulation will be passed. It would not look even remotely like what it should look like. The risk takers got their golden parachutes (bonus were already paid years back).

The lesson ?

For years, Wall Street plus some academic pundits told us they found a new fountain of wealth by securitizing and transferring risks to investors, than keeping them on their books. It made the US banking system safer, they said.

Now we all know where the risks have been transferred to. That’s you and me – the tax payers, the public. It’s no magic at all – only a fairy tale that we should never have believed in.

Shouldn’t we, instead, worry about the political willpower gets diluted through persistent lobbying efforts that we end up with water-ed down version, a shadowy figure of better regulation ?

Give me a break.

I agree that this show was kind useless in that it did not help the average listener, one such as myself, to understand nor to come to grips to the whys and how’s of this mess.

I don’t see how real confidence can be restored until these things are regulated properly.
Thank you

I have heard this topic handled in an excellent manner elsewhere on both NPR and PBS, but On Point can’t get it right, or even make sense of what is going on.

We don’t need a discussion of the usefulness of derivative markets or short selling in India. I finally turned the show off after 45 minutes of frustration and won’t listen to another On Point show on this topic.

Credit cards are a serious problem because they are virtual money. If people and/or banks had to have the money they are spending, they couldn’t spend it. This is the root of the problem and when you scale it up and abstract it even further by folding in mortgages it’s a huge mess.

While virtual money makes the world go around it doesn’t seem like we’ve adapted very well to having it, both on an individual level and on an institutional level.

Well, this person should provide an explanation of their value. If I had time to call, I would have asked that question.

He is not a happy person right now and is in shock.
He is over 50 so if he gets laid off he has to start over at that age.

Something is wrong here, very wrong.

Frederic Mishkin is not coming up with anything new.

He’s part of the problem, and he’s teaching the next generation of MBA’s. You want to change the system –start with change the educators.

If the American government had not INSISTED at the policy level that more people own homes..free markets with minimal intrusion might be better off as those who can only afford to rent are left alone.

At some point the American taxpayer is going to be unable to pay off the national debt … our national mortgage