Promod Radhakrishnan

PPIP Killed the 2008 Bear

The PPIP does involve some risk for tax payer money, but its probably one of the only few options to revive the MBS/ABS/CMO markets and have liquidity flowing again. The question is not whether big banks will gain from this...but whether there are enough controls to safe guard public moeny. Considering the situation, Tim Geithner and team have done a decent job. If there's nothing on the table from the government, tha market's going to stay off such assets for a long period. Fresh Fed lending alone doesn't help - banks just park it back as deposits with the Fed itself! So, i would say the PPIP is one of teh few good options to get the credit markets functionaing near normalcy again!

PPIP Watch: Banks as Bidders and Sellers...Hmm, Remember Enron?

Nice post - i do agree there's enough and more skin-in-the-game from the government/treasury and the plan does have a risk factor of collusion and flawed pricve discovery. But putting this in context -a) institutions badly mauled by the crisis
b) increased share holder vigil
c) a new set of regulations forcing higher capital cushion, stronger liquidity norms etc
do we really think either the government or the banks will let this happen in the near term? More over, the relaxation of mark-to-market accounting norms reduce the incentive associate with such devious tactics.

Also, the bigger question - other than letting the liquidity crisis play out slowly (which would have severe unemployment consequences), what are the alternate options to unfreeze liquidity?