There's been a lot of literature on how to help ailing banks.
What about the amount of toxic loans held by banks?
Is there a list from banks showing how much defaults more than
6 months? More than 3 months?
(a). Number and $amount of arrears more than 6 months old
how many wif loan deficit $100k
how many wif loan deficit $200k
how many wif loan deficit $500k
how many wif loan deficit $700k ....
(b). $Amount of foreclosed properties - can form a company
to buy these off first and then sell it
(c). Can use a medium sized bank which has many branches throughout the country with very little toxic assets to take over the foreclosed properties and resell it? Use the same bank to give out home loans to buyers who qualify for purchase of foreclosed properties?
This bank effectively backed by government and help to unwind the problem. Get this bank to make new home loans (specialise
in home loans). Hopefully this will work.
(d). The reason the TARP $$$ is not enuf is because of the depth of the toxic asset in each bank. For bank C for example, govt bailout may be US$40bn but market cap is US$18bn and toxic assets carried at costs US$300bn. So, how can $40bn be enuf?
It needs $300bn. But again, with every wave of lay-offs, more defaults, this $300bn could grow to $500bn.....
Conclusion: Helping the banks is like a bottomless pit.
Can a binary fission work: Break C into C1 and C2?
C1 remains a bank.
C2 holds the toxic assets?
But C2 will owe lots of $$$ to C1.
(e). To help all banks at same time will not work. Their bad loans are miles too long and takes too long to unwind.
Best to start with moving the foreclosed properties.
Regards
Blueangelfish
