The Wall Street Journal is reporting, Banks are trying to sell toxic assets to themselves.
Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program.
Banks want to sell themselves back their toxic assets (for a profit I will assume), via the PPIP program, which is (cough, cough) the gift that keeps on giving already. So, remember, the PPIP will have U.S. taxpayer subsidies available to clear the books from these worthless (i.e. toxic) assets many banks currently hold.
Hopefully the answer will be a resounding "NO". The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense.
Baseline Scenario repeats the details of the PPIP program, goes through examples, using the rules of PPIP, and gives us this conclusion:
Allowing banks to buy their own assets under the PPIP is a terrible idea. In short, it allows a bank to sell half of its toxic loans to Treasury – at a price set by the bank
I don't think I need a calculator to see how this idea adds up.
Read the entire baseline scenario post, it's the most detailed analysis to clearly spell out these 6 letters, RIP OFF.