The New York Times takes a look at the difficulty of valuing the bad assets. "Administration and Congressional officials say it will give the government flexibility to buy some bad assets and guarantee others in an effort to have a broad impact but still tailor the aid for different institutions. But getting this right will not be easy. The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor's, the credit rating agency."
"The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors."
In his interview on TODAY, Obama stopped short of unveiling a so-called "bad bank," but he hinted that something is going to happen that includes both buying up some toxic assets, as well as making banks write down some of those bad assets.
The Wall Street Journal has a good piece about the staffing of the TARP at the Treasury Department, and how the staffers are coming from some of the failed institutions.
Another bailout PR problem? "Even as the economy collapsed last year and many financial workers found themselves unemployed, the dozen U.S. banks now receiving the biggest rescue packages requested visas for tens of thousands of foreign workers to fill high-paying jobs, according to an Associated Press review of visa applications. The major banks, which have received $150 billion in bailout funds, requested visas for more than 21,800 foreign workers over the past six years for senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households."
Do folks realize that in the midst of this new financial bailout package, as well as the stimulus, that the Obama administration is also working on a new budget?