Do you think the government could "partner" with private banks to help buy up these troubled assets?

readytoretire answered 10 months ago …

The problem with a partnership is one of spliting up the value of the assets. The bank wants to be sure that it doesn't give away anything of value, and the government doesn't want to buy worthless assets. The bank is also afraid that even the worthless assets it has could be worth money, so how do you value that. The government wants to buy cheap assets and have them actually make money, so they can brag that the bailout actually made money. Hard to see how these two get together. Only when the bank is fixing to cave in will it agree to let something go, or when someone in government says we have to move forward at any cost.
And I agree with the idea of having the government running banks is a dumb idea. Fanny and Freddie were fine until Congress kept pushing them to take on more loans to serve a goal of Congress, more home ownership, and more minorities in homes. Just like now, when they are talking about making the banks loan money. Banks don't make money on cash in the vault, they make money by lending, so if they aren't lending, must be some problem. Forcing them to lend will only move the timeline on payment, not solve the problem.