March 11, 2009
TALF Program Lacks Investors
The Government's $1T TALF program is stalled. Recall that the government is offering to loan $1T at below market rates to investment funds (hedge funds) if the funds buy AAA asset backed securities. How could a fund turn down cheap money? The loan comes with a requirement that the hedge funds open their books to any government agency that comes a calling. Moreover, the funds could be liable for a representation that they are "solid." In other words, the funds will not participate in the government's voluntary program because the conditions are too onerous. This comes on the heels of news that several banks are paying back TARP funds in order to free themselves from a growing list of government conditions, even though they could otherwise use the funds. The conditions include -- mortgage modification requirements, foreclosure and eviction delays, executive pay caps, limits on sales meetings and exectivev retreats, shareholder vote on exective pay and others. The list threatens to grow everytime some company holds a meeting in Los Vegas. The government is finding its public/private partnership programs tough going.
March 11, 2009 | Permalink
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