MichaelSchmichael

Geithner: A Fool with a Plan? And Is That a Bad Thing?

Since nobody else has started on the vast "potential for manipulation" topic here, I'll re-post a prior post. It seems as if any bank that is currently holding a mark below 93 cents can presumably "buy" the legacy assets at or near 100 cents (most likely indirectly through a hedge fund capitalized with bank money), mark a gain on the "sale" and basically just walk away from its equity stake (leaving the taxpayers with the loss, of course, when the assets prove to be less than that). Stated differently, if the mark is already below 93 cents, the bank has already lost the 7 cents it would take to buy the legacy assets at 100 cents. Why wouldn't the banks do this? Does the False Claims Act provide a mechanism for potential taxpayer recourse?