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Re: Interesting Provision of the Bailout Bill
From: David Farber <dave () farber net>
Date: Mon, 29 Sep 2008 06:08:05 -0400


From: Newmedia () aol com
Date: September 29, 2008 5:35:29 AM EDT
To: dave () farber net
Subject: Re: [IP] Interesting Provision of the Bailout Bill

Hank:

I believe that you are right. I'm not an attorney but I have some understanding of the finances involved.

What is happening is an authorization to restructure underlying loans, regardless of the CDS/CDO derivative (and SPV, okay don't ask <g>) off balance sheet bets that were made by the banks and other "servicers" involved.

In addition, where the banks reserves can't cover the credit they extended, I presume they will be "bailed out" so that they can remain solvent.

So, as you have implied, the "investors" in these derivative schemes are not being "bailed out" -- in fact they are getting hosed.

Mark Stahlman
New York City



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