More on Toxic Assets - the bitter truth behind the scenes.

Discussion in 'Credit Talk' started by cap1sucks, Feb 22, 2009.

  1. cap1sucks

    cap1sucks Well-Known Member

    By definition, toxic assets are those whose value is so uncertain that there is no functioning market for them.
    Or so goes the official definition. But there is always two sides to any coin. To the government and the banks a toxic asset is a non performing loan. To the debtor a toxic asset is one that could be forcibly taken from them at any time by their creditors or a 3rd party debt collector. It is toxic to the debtor because it is an asset that they rely on to provide them with a valuable benefit they would lose if they were deprived of it through court order. It is always an asset that must be protected by some viable method.
    Prior to the establishment of Toxic Assets Recovery Inc., debtors had no truly viable means of assuring that they could not be deprived of their valuable assets and that is what made them in effect toxic to them. br/> Now then, back to the chase. If TARP paid too little for the toxic assets it bought, the banks would not be restored to financial health. If it paid too much, the banks would get a windfall at taxpayer expense. The Treasury Department also realized that in any price negotiation, the banks would know more about the nature and value of the assets than would the people representing TARP.
    Since abandoning the original concept of buying up toxic assets, TARP funds have been deployed to fight financial fires. Some of the money has even been used to bail out the U.S. auto industry. Meanwhile, the problem of toxic assets clogging up the nationâ??s financial arteries has remained.
    Fortunately, there is a way to buy up toxic assets that does not require assessing their value today. It is based upon the indisputable fact that at some point between now and thirty years from now, the value of all of todayâ??s toxic assets will be known with certainty.
    The Treasury should create a â??bad bankâ? to buy up toxic assets. Letâ??s call it The Bad Bank of the United States (BBUS).
    BBUS would buy whatever assets a financial institution wanted to sell to it, paying whatever price the institution asked, up to (say) 80% of par value. The institution would get cash. BBUS would get the toxic assets plus a special contingent variable warrant (CVW), good for common stock in the institution.
    BBUS would place all of the toxic assets obtained from each institution in a separate account. The cash generated by the assets would be retained in the account and invested in Treasury securities. Each account would be charged interest on the original purchase price of the assets at the Treasuryâ??s cost of funds plus (say) 1% to cover the operating expenses of BBUS. The detailed status of each account would be posted on the Internet.
    BBUS would wait until all of the toxic assets in a given account had resolved themselves, either by being paid off according to terms or via some default process. And that phrase "via some default process" is the key to understanding what is intended to be the ultimate final resolution to the problem as seen by government and the banks. They understand full well what that default process involves. They know that the debtor is going to have to be forced to foot the bill by mortgage foreclosure, repossession of vehicles or other security or garnishment of wages.
    Debtors must understand that if they are sued and garnished the creditor can and will take almost anything it can legally take. Debtors must learn how to protect their assets before the trouble sets in. They need to understand that their need to get effective protective measures in place starts at the time they first default on any note, mortgage or credit card debt. Their first step should be to protect all vehicles or other assets such as boats, trailers, campers, or anything which has a title and is wholly owned by the debtor. These types of assets should be protected as soon as the amount that is owed becomes less than what the asset could be sold for. The only way to protect them is to have a big lien placed against them so that the lien is always worth more than the value of the asset.
    Most debtors have long known about the idea that their assets could be placed in various sorts of trusts or shell corporations but creditors can easily pierce those types of shell games. Far too many have learned that those kinds of protections are expensive to set up and maintain and actually provide little or no protection at all. Many are nothing but a scam sold to the debtor at outrageous prices. Today there is a different type of asset protection that is truly invincible and Toxic Asset Recovery Inc. provides the only true method of asset protection for consumers. This is true because the debtor's name is not a part of the corporate structure in any way.
    Toxic assets recovery Inc.,
  2. jjgross

    jjgross Well-Known Member

    Swiss banks

    Cap 1 did you know the swiss banks are giving the fbi the authority to look into the accounts of some very powerful americans.They already have looked into 400 accounts.Maybe that"s where some of these arrests are coming from?
  3. cap1sucks

    cap1sucks Well-Known Member

    Yes, I have been aware of that for several months now thanks to my RSS feeds. The only problem now is how is government going to continue to fund such costly excursions? Just to give an idea of how much money is going to be required to fund the massive increase in government spending, let me illustrate it this way.

    According to the treasury a federal reserve note is .0043 inches thick. The size of the tarp bailout alone would comprise a trail of bills stretching from New York to Cleveland, Ohio. And that don't even start to show the size of the Trillion plus deficit that has been created since Obama's inauguration. The only way to recover the bank bailout money is through legal action against most debtors.
  4. jjgross

    jjgross Well-Known Member

    Government (hidden)

    Cap 1 it doesn't matter who's President,Bush,Obama,Lassie or Attila the hun.The people who are always there run the usa,and that's who set's policy.The cold hard fact's is they don't give a damn about granny or the hard working joe with 6 kids and deep in debt.Let's bail out the good ol'boys first and maybe it will trickle down.Their threat is to say well we will have to file bk and in the process we'll take down the nation.Well maybe we should start over,cause this isn't working.The Fords and Dupont"s didn't get rich by them doing the the hard work.
  5. cap1sucks

    cap1sucks Well-Known Member

    Quite so and I don't like to be preaching doom and gloom all the time. I'd like to be able to take the optimistic view and say that hope is on the horizon and things will soon turn around and the sun will shine once again but right now those cards simply aren't on the table. The only way out is for government to keep it's hands off and let the economy work itself out.
    Why should the government bail out Chrysler, GM and car makers when Ford isn't asking for any government money? If Ford can make it then they must be doing something right that the others need to copy. Why should government help some banks who are crying for help when so many are strong and healthy? Let them fall. If they can't operate within sensible parameters then let them fail. We would be better off without them. Countrywide was the nation's largest home lender. They are gone and nobody is shedding any tears. The nation is better off without them. Same with automobiles. Who needs so many different makes and models? Let the automobile makers turn out fewer models and cut the costs of making cars. Each new model costs billions of dollars to bring to market. Trucks might be a different story. Different sizes of trucks for different types of jobs. Small pickups for small jobs and semis for the big jobs and a couple of models in between should be enough.
    All of them manufactured by one maker could have duplicate interiors so one plant could make the dashboards for all of their models. That would save billions right there. If there are fewer choices buyers will purchase whatever is available like it or not.
    But let government keep it's hands out of the market place and we will all be better off.
    Toxic Assets recovery

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