Apr. 9, 2009, 7:48 AM
As a taxpayer, you and your children (and their children) are already financing the banking bailout. But the White House hopes you’ll pitch in a little more. NYT reports that the administration is pushing for the bailout equivalent of war bonds — funds that households would invest in out of some sense of patriotic duty.
Specifically, private individuals would be asked to invest in a fund that buys up distressed mortgage assets, holds them, and eventually (ideally) pays the investor a positive return.
It’s just like PPIP, but without the leverage offered to the big boys! Frankly, it sounds like a bunch of marketing hoo-ha. If the PPIP and the rest of the bailout schemes can’t bring the banks to health, then tell people it’s their patriotic duty to invest in these funds and contribute more to the cleansing of bank balance sheets.
Steven A. Baffico, an executive at Blackrock, offers a lovely quote that should some it all up: “This is an opportunity to forge an alliance between Main Street, Wall Street and K Street.” If that kind of talk from a Blackrock exec doesn’t set your internal alarm bells off, nothing will.
