"You know those supersales at your local department store in which they offer great deals on a couple of things in the hopes of getting enough people in the door so they can move the crap too?" Ask Massimo Calabresi and Stephen Gandel in Time. "That's sort of what the Treasury Department and Tim Geithner are doing with the bank plan that was rolled out on Monday."It's a good analogy. And a good article. In particular, it does something fairly few articles have done thus far: Attach numbers to the various parts of the plan. The first portion, where the FDIC insures investors buying bad loans, is looking at a knowable pool of toxic loans that's around $230 billion. That's the piece of the plan that's gotten the most attention. The second piece focuses on a particular group of securities: Residential-backed mortgage bonds that were once AAA but have been downgraded. Right now, there's about $153 billion of these suckers. It's hard to say whether that's very close, or very far, from the number that has to move off the bank books and back into the market. The Treasury Department doesn't know either: This portion of the plan was fairly vague and the financing offered by the Treasury is much less attractive. That suggests they're unsure of what's needed and worried about losing too much taxpayer money. Then there are the commercial mortgage-backed securities and other asset-backed securities that were AAA-rated but have since been downgraded. Time calculates there's about $37 billion of these.All in all, we're looking at $420 billion in toxic assets and loans that the government wants to get off of bank sheets and into the market. The theory of the plan, of course, is that these are probably worth quite a lot more than $420 billion, and so saying that's the pool isn't necessarily saying that's what we'll spend. If it was, this would be fairly easy. LOOK MA: NUMBERS!
"You know those supersales at your local department store in which they offer great deals on a couple of things in the hopes of getting enough people in the door so they can move the crap too?" Ask Massimo Calabresi and Stephen Gandel in Time. "That's sort of what the Treasury Department and Tim Geithner are doing with the bank plan that was rolled out on Monday."It's a good analogy. And a good article. In particular, it does something fairly few articles have done thus far: Attach numbers to the various parts of the plan. The first portion, where the FDIC insures investors buying bad loans, is looking at a knowable pool of toxic loans that's around $230 billion. That's the piece of the plan that's gotten the most attention. The second piece focuses on a particular group of securities: Residential-backed mortgage bonds that were once AAA but have been downgraded. Right now, there's about $153 billion of these suckers. It's hard to say whether that's very close, or very far, from the number that has to move off the bank books and back into the market. The Treasury Department doesn't know either: This portion of the plan was fairly vague and the financing offered by the Treasury is much less attractive. That suggests they're unsure of what's needed and worried about losing too much taxpayer money. Then there are the commercial mortgage-backed securities and other asset-backed securities that were AAA-rated but have since been downgraded. Time calculates there's about $37 billion of these.All in all, we're looking at $420 billion in toxic assets and loans that the government wants to get off of bank sheets and into the market. The theory of the plan, of course, is that these are probably worth quite a lot more than $420 billion, and so saying that's the pool isn't necessarily saying that's what we'll spend. If it was, this would be fairly easy. 
