Word: cashed
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...largely overlooked is what the bailout would really cost the banks. Yes, banks would get cash for loans they can't sell without government assistance. But these same banks would also be forced to book a large accounting loss on the sale of the loans, further eroding common equity-a key measure watched by stockholders...
...government investors will be willing to pay more. Why would they do that? Like lower prices, leverage boosts returns. So an investor buying an asset in part with loans should be willing to pay more than someone who has to buy that same asset with just their own cash. Based on TIME.com's analysis, an investor, using the 6-to-1 leverage the government is providing, can pay as much as $0.70 per dollar lent, and still expect to get the same return as an unlevered investor...
...loans start trading more regularly because of the government's PPIP program, the banks would have submit those loans to so-called mark-to-market rules. That means the banks would have to take a write-down not just on the mortgage loans they sell, and get cash for, but on all of the mortgage loans on their books. Banks hold about $3.5 trillion in mortgage loans. So having to mark all those loans down $0.21, not just the ones that are sold, would be disastrous. (Read "Geitherner's Bank Plan: Only a Partial Solution...
...plan pushes the clearing price for bonds up to $0.95, then I don't think the banks can participate," says Tyler Durden, a former Wall Street trader who now writes the popular finance blog ZeroHedge.com. "If the price is significantly less than that, banks are going to need more cash from the government or some other solution like nationalization to be able to survive...
...finance experts question whether the University’s investment decisions resulted from a lack of foresight as suggested by some media outlets.A recent Forbes cover story stated that Harvard’s “supremely self-confident money managers” were in a “cash-raising panic” after billions of dollars in derivatives investments went sour—forcing the University to post collateral it did not have. The dire situation, the article said, forced Harvard to pay unfavorably high interest rates to raise the necessary funds.But other finance experts said the issuances...