Thursday, October 2, 2008


Follow Me on Facebook Follow Me on Tweeter
"Protection from the Golden Parachutes"

I read to the page #9, I found the paragraph below, I become disappointed and did not read further... I'm not a proficient in the art of bailing out the financial institutions - maybe this is why I have luck in understanding...

From the bailout Bill:

(e) PREVENTING UNJUST ENRICHMENT.—In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset.

How do I understand it:

If a financial institution has paid for an assets that now in trouble $100K a year ago, and now the market price of this troubled assets is $1K, we have a guarantee that we will not bailout this assets for more than $100K, but there is a high possibility that we will pay $100K for something that currently worth $1K and is in trouble and could cost $0 in a few months.

No comments: