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Thread: US taxpayers, ready yourselves for another fleecing via TALF

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    Banned Melonie's Avatar
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    Default US taxpayers, ready yourselves for another fleecing via TALF

    (snip)The greatest bait and switch of this generation in all its visual splendor. As a result of the TALF's non-recourse nature, a hedge fund X can buy Bank X's MBS Portfolio which is marked on the bank's books at 80 cents on the dollar (but has a market price of 20 cents) for the marked price with a 3% equity check and TALF filling the balance. A day later, Bank X repurchases the portfolio from hedge fund X at the 20 cent market price, pays a $5 million fee for the "trouble" and waits for the portfolio to appreciate to 50 cents on the dollar by 2014. Hedge fund X takes a 75% loss on its nominal equity stake but more than makes up in transaction fees. The TALF portion takes a 75% loss with no recourse and no margin to fall back on.

    As a result Bank X takes no writedown now, and in 5 years may book an equity profit of as much as $25 million (net of transaction fees paid to the Hedge Fund X), while Hedge Fund X books a profit of $3.2 million for one day's work...

    Lastly the U.S. taxpayer loses $54.3 million on a $77.6 million TALF Investment, or 70% (net of 5 years of interest income)."(snip)

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    God/dess Paris's Avatar
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    Default Re: US taxpayers, ready yourselves for another fleecing via TALF

    So what percentage of the total national budget is the $54.3 million? So the national Budget is $4.3 Trillion, that means we are talking about 1/10 of a percent of the total national budget. Or .0012 of the total federal budget for 2009-2010.

    It is also only 72% of what the AIG execs got paid in bonuses last month with taxpayer money. It is hard to feel outrage on such a minuscule amount of what taxpayers cough up every year. It's a little like arguing with a grocery clerk over a penny difference in price on an item.


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    God/dess Deogol's Avatar
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    Default Re: US taxpayers, ready yourselves for another fleecing via TALF

    Pennies add up. Part of the reason we are in the mess right now - oh it's not so much, come on with it!

    Fleecing is happening in California right now - $40,000,000,000.00 in new taxes rolling around - starting mostly in May 2009. After raising taxes that high, they are discovering a new deficit of $8,000,000,000.00 now - LOL!

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    Banned Melonie's Avatar
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    Default Re: US taxpayers, ready yourselves for another fleecing via TALF

    actually, tomorrow's announcement is expected to allocate 1 trillion dollars to the new TALF program. The numbers in the example I listed were in reference to a theoretical TALF transaction, which involved the US taxpayer winding up with 30 cents on the dollar worth of 'value' while the investors and banks get to pocket the other 70 cents. This translates into a possible 700 billion in US taxpayer bailout funding IN ADDITION TO all of the already existing bailout programs.

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