Word: programming
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...Some observers say the multi-hundred billion dollar losses, along with the possibility that government will be tapped out when it comes to financial rescues, raise the question as to whether some of the big banks will choose to, or be able to, participate in the Treasury's PPIP program...
...course, the hope of the Treasury's PPIP program is that with cheap loans from the 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...
...problem is that $0.70 is still less than the $0.91 average banks are holding loans on their books. The Treasury Department has said that PPIP program could buy up to $1 trillion in "legacy" banks loans and other debt. That suggests banks could lose up to $210 billion on those sales alone (see chart below). Citigroup, for example, has about $200 billion in residential U.S. real estate loans. Goldman estimates that Citigroup values those loans on its books at about $0.94. If it were to sell half of its mortgage loans, Citigroup would lose an estimated $23 billion, about...
...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...
...Shaw, playing college ball at Harvard was the natural choice. The prospect of enjoying high-level academics while also contributing to an already strong softball program was too good of an opportunity to pass...