Hey, I know the stock market loved hearing the details of the The Public-Private Investment Program. Huge rally. But consider this: 1) Obama-Geithner want to get these so-called toxic securities off bank balance sheets so banks supposedly will lend more; 2) the PPIP plan is predictated on banks agreeing to sell at some price to be determined by price discovery via subsidized private investment funds; 3) Many banks are not going to want to sell this so-called toxic assets which have cash flows and upside appreciation potential; 4) Regulators may push them to sell and take huge writeoffs; 5) This will require further capital injections, maybe $1 trillion; 5) Congress and public opinion show little interest in another ginormous bailout. Indeed, Congress has zeroed out Obama's $250 billion placeholder in the upcoming budget.
In addition to the points mentioned in the article, it seems that banks are starting to turn the corner even without this rescue package. Citi and BOA ran a profit the first two months of this year, Wells is hiring more people to process mortgages. I agreed with the first bailout, but I am not so sure that this one is necessary.
Banks are looking more closely at credit worthiness before making loans, and people are starting to save more money (both good things imo). I don't think we want to push them into making more bad loans.
Will banks even be willing to get rid of their toxic assets for the price that the government is likely to pay? Might end up that not much of the bailout fund gets used if the banks are unwilling to sell their assets for bargain basement prices.
On the other hand, my portfolio is doing much better since the announcement, so maybe it is a good thing.