Lex Luz

Bernanke Gives Up on Reverse Auction Idea

The better idea is the reverse auction, which contributes to price discovery. If banks don't want to sell their garbage to the Treasury at the market-clearing price discovered through a reverse auction facility, fine, let 'em keep it.

It is readily apparent that the plan here is to transfer the very last bits of wealth into the pockets of bankers and drive the US into default. Paulson's pals on the street profit best from a facility that declares a "held to maturity" price and buys assets at those hugely inflated levels, so that is what will be done. The putative Dodd plan is nothing more than a red herring.