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But the US government may still be guaranteeing a lot of their assets, in particular troubled mortgages and other toxic assets that might not be gone from their

by kqr2 16y ago

But the US government may still be guaranteeing a lot of their assets, in particular troubled mortgages and other toxic assets that might not be gone from their books. In 2008, this guarantee was for $306 billion. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYXG9i3RJRRk http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...

jonknee 16y ago
Sounds like that is included: > And the government will get even more money from its investment in Citigroup. The Treasury said it would reap a profit of $2.25 billion by selling all its Citigroup trust preferred securities, which it received for guaranteeing $301 billion in the bank’s most troubled assets. It expects that sale to be completed on Tuesday.
- deleted 16y ago
  [deleted]
- pigbucket 16y ago
  How does selling these trust-preferred securities relieve the Treasury of its obligations to guarantee troubled assets? (I ask because I don't know)
  - jonknee 16y ago
    Because they only sold the securities after the guarantee agreement was over: http://news.yahoo.com/s/nm/20100930/bs_nm/us_usa_citigroup_tarp http://news.yahoo.com/s/nm/20100930/bs_nm/us_usa_citigroup_t... > In a statement, the Treasury said it sold all of the trust preferred securities that it received in exchange for guaranteeing a pool of about $301 billion in Citigroup assets. The Treasury never made any payouts on the guarantee, which has been canceled.
infynyxx 16y ago
"In 2008, this guarantee was for $306 billion." Who knows how much billion of toxic assets are still under the banks' book because there is no standard method for determining those value. Remember during financial crisis, when Bear Stearns, Lehman, AIG and most TARP funded banks told, their value of toxic assets kept on rising. $306 Billion seems skeptical until there is some standard method of valuing those toxic assets.
pigbucket 16y ago
That's an excellent point. Talk of the Govt. making a profit is nonsense until it's clear how much loss on those assets it ends up absorbing. According to that Bloomberg piece, though, Citi was supposed to cover the first $29B of losses, so that plus earned dividends plus the relatively paltry share value appreciation means there's a bit of a buffer for the Govt.
- stretchwithme 16y ago
  exactly. And even if the government is able to inflate away the horrific losses its trying to hide from us in the mortgage market, how much these paper profits will ultimately cost all of us is what matters.

by kqr2 16y ago

jonknee 16y ago

Sounds like that is included: > And the government will get even more money from its investment in Citigroup. The Treasury said it would reap a profit of $2.25 billion by selling all its Citigroup trust preferred securities, which it received for guaranteeing $301 billion in the bank’s most troubled assets. It expects that sale to be completed on Tuesday.

deleted 16y ago
[deleted]
pigbucket 16y ago
How does selling these trust-preferred securities relieve the Treasury of its obligations to guarantee troubled assets? (I ask because I don't know)
- jonknee 16y ago
  Because they only sold the securities after the guarantee agreement was over: http://news.yahoo.com/s/nm/20100930/bs_nm/us_usa_citigroup_tarp http://news.yahoo.com/s/nm/20100930/bs_nm/us_usa_citigroup_t... > In a statement, the Treasury said it sold all of the trust preferred securities that it received in exchange for guaranteeing a pool of about $301 billion in Citigroup assets. The Treasury never made any payouts on the guarantee, which has been canceled.

infynyxx 16y ago

"In 2008, this guarantee was for $306 billion." Who knows how much billion of toxic assets are still under the banks' book because there is no standard method for determining those value. Remember during financial crisis, when Bear Stearns, Lehman, AIG and most TARP funded banks told, their value of toxic assets kept on rising. $306 Billion seems skeptical until there is some standard method of valuing those toxic assets.

pigbucket 16y ago

That's an excellent point. Talk of the Govt. making a profit is nonsense until it's clear how much loss on those assets it ends up absorbing. According to that Bloomberg piece, though, Citi was supposed to cover the first $29B of losses, so that plus earned dividends plus the relatively paltry share value appreciation means there's a bit of a buffer for the Govt.

stretchwithme 16y ago
exactly. And even if the government is able to inflate away the horrific losses its trying to hide from us in the mortgage market, how much these paper profits will ultimately cost all of us is what matters.