Gov. Jon Corzine on buying into Geithner's toxic asset plan

Tuesday, March 24, 2009

U.S. Treasury Secretary Tim Geithner's plan to get so-called toxic assets off of the nation's bank balance sheets relies on private investment firms, including pension and hedge funds investors, to buy up the bad assets. In return for the investment, the government would help minimize their risk. Despite this assurance from the government, who is willing to buy the assets and how exactly will this work? New Jersey Governor Jon Corzine has a great deal of experience in both the private and public investment markets and he joins The Takeaway now to explain why these bad debts might be a good investment.

Guests:

Gov. Jon Corzine

Contributors:

Jen Poyant

Comments [1]

Paul Stein

Geithner and the three bears: momma bear, papa bear and baby bear.

There are three scenarios for the toxic assets.
1) Some assets are worth more than the market price. The banks will not sell the assets at a discount.
2) Some assets are worth less than the market price. The buyers will not pay a premium to purchase them.
3) Some assets are worth the market price and the government subsidizes the transaction.

Or the assets are too cold, too hot or just right.

The government is still stuck purchasing the worst toxic assets. The banks will still keep the best toxic assets. The rest will be bought by private investors with a government subsidy.

I hope President Obama will figure out a way to pay for the war on leverage.

Mar. 24 2009 09:26 AM

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