Ricardo Caballero was busily arguing during this whole discussion that the government ought to guarantee asset prices five years out, because if we could only get bank stocks up, everything would be fine.
Of these guaranteed assets 16.2%, or $77.0 billion of the total amount guaranteed, is classified as multi-sector, which actually includes Alt-A as well subprime.
Four companies Ambac, MBIA, Financial Guaranty Insurance Company and Financial Security Assurance have guaranteed asset-backed securities, such as collateralised debt obligations and credit derivatives, worth $160 billion.
The financial sector, which is still living off an array of hidden government guarantees, asset purchases, and cheap money, is making enormous profits again.
Finally, ICT is improving our understanding of the role different long-term instruments play (such as guarantees, asset-backed and asset-based structures), how they're used, and what challenges they pose for SME financing.
The government is likely, for example, to guarantee banks' assets.
Buying or guaranteeing these assets would remove worries that the banks would be hurt further if the assets continued to lose value.
Instead, the plan may rely heavily on the government guaranteeing those assets against losses, as well as further injections of capital in the form of preferred shares.
See articleBank of America paid $425m to leave a federal programme that guaranteed the assets it acquired when it took over Merrill Lynch.
The program coincided with several other government plans to counter a credit squeeze, from guaranteeing some assets to putting political pressure on bank executives to lend more.
