Ways to participate in the $700B program

3 years ago I loaned $15K to a friend to help him start his business, long story short… he does not pick up my calls any more. Can I convert this loan document into a form of CLO and get my money back out of the $700B fund? no pun intended

Got the idea after reading the following … U.S. Widens Scope of Bad-Debt Plan Beyond Home Loans (Update1) http://www.bloomberg.com/apps/news?pid=20601087&sid=a7iCv1F0kuvQ&refer=home

Assuming we’re speaking in hypothetical’s here: Shouldn’t you only receive the value of those loans? Which in your case, considering your boy won’t call you back, has got to be worth $0.05 on the dollar? My understanding of this bailout is that the gov’t is buying up the packaged loans (MBS, etc), not the actual value of the loans contained within. This is something that I’m a little confused about. If the gov’t is buying these structured products what benefit is it going to have for the selling company? I mean aren’t these assets being carried on the books at the fair value (this is what everyone is complaining about, so I guess they are). I guess my question is what real difference does it make if toxic wasted is held on the books at fair value than if they are sold at fair value and replaced with cash?

I think the issue is that no one is really sure what fair value really is. It is probably higher than current market value because people are too scared to trade them anymore - that’s a liquidity problem, since the true cash flows from these things likely are higher. The government is - as far as I can tell, offering a floor for the securitized turds and liquidity, possibly in exchange for increased oversight. The actual securities are likely worth more than the Govt is paying, but there aren’t enough other buyers out there to get them moving at better prices. If a bank has too much of this crap and it is making their balance sheets fluctuate wildly, they can just take the floor price and get the stuff off the balance sheet. The govt may actually make a good trade on this and if so, it may have a positive long term tax effect, although when govt sees a new cash stream, the first thin administrators tend to do is think of how to spend it.

Invest in a Mossberg Pump Action, a gallon of gas, and some matches. At the very least, a cattle prod and baseball bat.

This “bailout” is actually pretty misleading. It all comes down at what proice the gov’t buys these assets from the banks. Not sure, but it sure won’t be near PAR. Banks will still have to realize the losses. Also the AIG “bailout” is really just an organized dissolution. Gov’t underwrote a pretty solild loan with appropriate rates, and captured the upside, in case it turns around (which is unlikely). I would expect to gov’t to get its money back and more from this bailout. Hardly, throwing money down a hole, which is what the press implies. Anyway, we’ll have to wait and see. go long on… canned goods, generators, handguns and locks.

FTR the govt is paying 60c on the $, recent trades have been as low as 20c on the dollar. It adds liquidity and a more reasonable prices than the market is giving considering the negative sentiment. That said I also think the govt will make $$$

Is a Mossberg pump action the way to go? I’ve been pretty impressed by Berettas…

you loaned 15K to a friend without documenation / formal loan agreement + repayment ?

I am no different to a No Doc Mortgage lender. What I am wondering is if they all can walk away with 700B of cash, I want my piece of it too.