Here We Go Again

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One of the great (awful) things about TARP was the brilliant (daft) plan to buy assets at above fire-sale (intensely overvalued) prices. This bit of financial wizardry (outright fraud) would have permitted banks with temporarily encumbered assets (irredeemable toxic sludge) to reprice their balance sheets based on the marks (fantasy) set by the Treasury's purchases. This has the added effect of improving the tenor (thickening the miasma) of the market and restoring confidence (validating pessimism).
Given the innate brilliance (intellectual bankruptcy) of this part of the plan, it is not surprising to see it back, as clever solutions are few and far between (we have nothing else to do but sit and watch).

Valuing toxic assets on bank balance sheets is among "real key issues" as the Obama administration devises a plan to mend the financial system and steady credit markets, Comptroller of the Currency John Dugan said.
The biggest challenge is how to "pick and choose which assets to take from open institutions and how much you pay for them," Dugan, the supervisor of U.S. national banks, said in an interview in his Washington office today.


Asset Valuation 'Key Issue' in Bank Plan, Dugan Says
[Bloomberg]

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