Sen. Corker suggested "that we should just take our medicine and get the country moving again." By which he appeared to mean that we just pony up the cash necessary to fix the system...

Actually, what he seemed to mean (at least to me) by "take our medicine" is that we should allow insolvent banks to fail. And you know what? I agree.

It is absolutely indefensible that we are propping up insolvent banks to protect equity (stocka) and bond holders. We are pumping more into these institutions than their entire market cap. And all we are accomplishing here is protecting the wealthy and the powerful and delaying the inevitable.

Shut 'em down! Let the FDIC do its thing. It will be far cheaper and it will have a far better result in the long run.

now this dickhead is himming & hawing on what to do? What the fuck has the jerkoff been doing for the past several months? Trying to figure out how not to pay his taxes again???

Valuing the assets is easy -- just put them up for auction, and see what you get. But we already know the answer.

The "assets" are worth nothing on the market, and the entire banking system is insolvent. The only thing that makes this "enormously difficult" is trying to hide that fact while shoveling taxpayer money to the banks as fast as possible, without giving the taxpayer a stake in the outcome through nationalization.

Even the idea that private investors will get involved is simply money laundering, because the government is talking about guaranteeing a floor for the assets -- in other words, giving investors a guaranteed amount of money to buy something we already know is worth nothing.

There are solutions, of course, but none of them are what the elites want to hear.

Between Geithner's and Obama's comments today, I'm thinking this is simply the 6 month punt until conditions are such that the dreaded N-word becomes politically feasible.

Really? Every mortgage in America is worth nothing? Really?

I'm glad you are not involved in this process in any way, friendo.

Here's the deal, stripped of pretense and populism and all that: there are $1.4 trillion in mortgages total in the system. About $900 billion are 'money good': payments being made, on time, every time. The rest are shaky...but still many making most or all payments. The 'toxic' assets are the mortgage backed securities that are based on these shaky loans. A very small # of them are worth 0. Many are worth 20 to 50 cents on the dollar. Many are worth more.

We have to get these prices determined, by real buyers lookng at them and ponying up real $ to buy them. Geithner is trying to get this going. I hope he succeeds. We all should.

My solution: let the 'bad' banks go bankrupt. If the stockholders don't like it, file lawsuits.

I think you need to familiarize yourself more thoroughly with how mortgage-backed securities are created. The fact that there are some solvent mortgages underlying the securities does not mean that the securities themselves are worth anything, or that anyone wants to buy them.

Furthermore, the banks are overleveraged to the tune of having $1 supporting $30 in outstanding debt. It doesn't take too many defaults to wipe out the entire pile.

Again you demonstrate hysterical hyperbole. The securities with some of the dodgy loans in them aren't worth 100%. But they are also not worth 0. I used 20 to 50 cents as an example.

The banks have marked down many assets worth (on expected cash flows) maybe 50-60 cents down to 20 because that's all they could get for them in this pawn shop environment. So their assets are artificially marked down.

I'm not saying some banks aren't in trouble. It is silly to say they are all insolvent.

They take the traditional attitude that the American people are too stupid to understand, but they are wrong. At least they are wrong vis a vis the people who are posting here.

Please give us your estimated range of values on the "toxics." Let us think about it. If you do not, we will believe you are trying to hide and to punt (good expression, earlier poster!), because everything is utterly down the drain already.

Obama, please do not allow pompous obfustication as usual.

Why doesn't Obama take back the excess $78Bn overpaid to banks by Paulson?

Why doesn't Obama sue the banks to return excess money?

After all if IRS overpays me excess money, they demand it back or take it out of my accounts directly. Failing which they send me to jail.

So, why can't the BIG banks be treated the same way?

Wait a minute!

The BIG banks donated MILLIONS to Senators and Obama's campaign.

I didn't donate beyond my usual sucker-fee $10

Right....Now if i were a HUGE bank, i can get away with even child labour and trafficking...

Damn... i wish i had incorporated myself earlier.

Not quite familiar with the concept, but I heard a story on NPR recently which reported that economics professors at an east coast university (Maryland?) were proposing that the US government sponsor a reverse auction of toxic assets. Supposedly small scale models structured around the current mortgage securitization crisis resulted in a more accurate valuation and purchase price for government investment.

I'm wondering whether Geithner's guarded comments about looking to private capital to handle the problem reflects this proposal. Hopefully someone with more knowledge about reverse auctions and their applicability to the current crisis will post an enlightening response.

I mean it's almost the middle of the night here and I don't work in (*) Wall St. and I don't have stock in B of A (tho' they do administer a ludicrously vanishingly tiny "uninvadeable trust fund" set up for me over 50 years ago and now the source of 1/10th of my monthly income; the other 9/10ths from Social Security).

As what I used -- in high fine style mettle -- to try stylistically to describe myself as being a "prematurely inadvertently retired" 78-year old female no longer (in today's market, obviously) employable for pay:

Would those of you who like just to say "let the banks fail" tell me what your blithe high-mindedness would like to do for me if you just cancel out 1/10th of a monthly income already too little for me to live on?

[I have a reverse mortgage account I can borrow against for probably four months at most. After that ........What?]

Could some of you be a little less high-handedly theoretical in discussing all of this? As though it were all a game of numbers and theory? I was able to play that game in my palmy years, but now.....

Now, I'd love it if someone here at Salon would reply to my post because it's the middle of the night and I "come over here" to find folks.

Thanks. [;-) ?!]

salonmarte