The Treasury acknowledges that private investors will be subsidized to take on the ownership of what it’s calling “legacy loans” and “legacy securities.”
(If these horrific securities are legacy loans, then the funeral industry should reclassify corpses as “legacy bodies.")
The Treasury cites as an example a loan valued by a bank at $100 that is sold for $84. In that instance, the private investor and the government would each put in $6, and the investor would borrow the other $72 from the government. If you’re keeping score at home, it means the private investor would put in 7 percent of the cash but would receive a much higher percentage of the profits. However at the end of the day if it doesn't work the taxpayer eats 83% of the losses.
Are you aware of what the word "Toxic" means?
