user8240

The Hedge Fund of America, LP

Bernanke said banks want to abandon fair value accounting standards and instead use their own estimates of hold-to-maturity prices for these assets, but "warned such estimates would be unreliable.”

But Hold-to-maturity is the price Bernanke said we should pay to takeover these assets. So, the plan is to deliberately over pay for the Banks mistakes.

Worse, the Bailout won't work. The Banks are not lending the cash they already have, why would they lend (even if they have more cash) if they are afraid they won't get re-paid? The Bailout plan is attacking the wrong end of the problem. Effective demand should be stimulated not the supply of cash. Money supply is the quantity of money times the velocity of money. Without effective demand, velocity will continue to fall.