Wednesday, October 01, 2008

Whitney says TARP would be a loser for taxpayers

Oppenheimer star analyst Meredith Whitney says taxpayers would lose money with TARP:
Taxpayers will lose money in the $700 billion government rescue plan for the nation's banking system, Oppenheimer analyst Meredith Whitney said.

Contrary to predictions from some supporters of the bailout plan, Whitney said on CNBC that the continued slump in housing prices will make a profit from the bailout unlikely.

"I think you definitely lose money on this $700 billion structure," Whitney said. "There's no idea where house prices bottom, and as a result how can you make money on this transaction?"

She said home ownership rates are still too high at about 69 percent and need to fall below 66 percent as more subprime mortgages given to less-qualified borrowers unwind.
We should put Meredith Whitney and Warren Buffett in an octagon and have them fight over this thing.


  1. Meredith has been right on almost everything. Of course this is a fleecing of the taxpayer. It should be honestly portrayed as a necessary tax instead of a pie in the sky method of the government to make money.

  2. Two TARP questions:

    1. what's the latest on the bailing out of foreign banks that have US branches? apparently Treasury would not budge on any provision to prevent foreign banks from transferring non-performing assets to their US branches so they could then sell them to the Treasury.

    2. are we buying them at hold-to-maturity or market rate? follow up: if mark-to-reality is repealed and the assets are marked to fantasy, will that be Wall Street/Treasury's justification for buying non-performing assets at the amount originally loaned out?